1 00:00:05,800 --> 00:00:11,760 Speaker 1: Welcome to trainings. I'm Joel Webber and I'm Eric. Oh 2 00:00:11,800 --> 00:00:15,840 Speaker 1: my god, we're looking at each other and not via zoom. Yeah. 3 00:00:16,000 --> 00:00:18,480 Speaker 1: If you're listening and you've listened to once in the past, 4 00:00:18,560 --> 00:00:22,040 Speaker 1: we probably sound really good for a change. And from 5 00:00:22,040 --> 00:00:25,560 Speaker 1: my closet, it's like when back in Bloomberg where Manhattan, 6 00:00:25,800 --> 00:00:28,400 Speaker 1: in the Bloomberg office with all the good stuff looking 7 00:00:28,440 --> 00:00:30,640 Speaker 1: across the table at one another, just like old times. 8 00:00:31,080 --> 00:00:34,800 Speaker 1: Is we have extra weight on each of our bodies. 9 00:00:34,840 --> 00:00:36,839 Speaker 1: But that's okay, we'll lose it back. Yeah, I just 10 00:00:36,880 --> 00:00:40,360 Speaker 1: need to start exercising again. Uh so, Eric, A lot 11 00:00:40,440 --> 00:00:45,840 Speaker 1: has happened in the last year and a half. Um, 12 00:00:45,880 --> 00:00:48,080 Speaker 1: I'm really glad that we can see each other across 13 00:00:48,120 --> 00:00:51,000 Speaker 1: the table from now. But we're not alone either. We 14 00:00:51,040 --> 00:00:53,959 Speaker 1: have a guest and I'm really excited to speak with her. 15 00:00:54,360 --> 00:00:57,680 Speaker 1: She's also here in person. Yeah, we're all in person 16 00:00:57,760 --> 00:01:01,320 Speaker 1: for a change, and it feels good. And this guest, Um, 17 00:01:01,360 --> 00:01:03,960 Speaker 1: besides being my boss, by the way, Um is the 18 00:01:04,080 --> 00:01:08,840 Speaker 1: chief macro strategist and equity strategist for Bloomberg Intelligence and 19 00:01:08,920 --> 00:01:12,520 Speaker 1: so on our team. I always go to her listen 20 00:01:12,560 --> 00:01:15,080 Speaker 1: to her about just what's going on. In the stock market, 21 00:01:15,720 --> 00:01:18,800 Speaker 1: and not only that, what influences the stock market, things 22 00:01:18,800 --> 00:01:22,400 Speaker 1: like inflation value versus growth. Um, how you know interest 23 00:01:22,480 --> 00:01:25,200 Speaker 1: rates in the FED or are looking in earnings? Right, 24 00:01:25,240 --> 00:01:28,440 Speaker 1: So I figured, given the markets had a long nice 25 00:01:28,560 --> 00:01:30,840 Speaker 1: run since March, since the last time I saw you, 26 00:01:31,440 --> 00:01:34,959 Speaker 1: we should check in on how everything's going from like 27 00:01:35,000 --> 00:01:38,360 Speaker 1: a macro strategist point of view. And then obviously E 28 00:01:38,480 --> 00:01:41,240 Speaker 1: T F s or are ways to play those opinions 29 00:01:41,319 --> 00:01:43,880 Speaker 1: and views, but sometimes it's good to just talk about 30 00:01:43,959 --> 00:01:47,160 Speaker 1: the yeah about you know, four thousand foot view of 31 00:01:47,160 --> 00:01:49,280 Speaker 1: the whole thing, and and so to welcome her, I'm 32 00:01:49,280 --> 00:01:51,960 Speaker 1: going to do a thing and I'm surprised. I'm gonna 33 00:01:51,960 --> 00:01:53,720 Speaker 1: surprise you with this thing. It's it's gonna be my 34 00:01:53,760 --> 00:01:57,440 Speaker 1: stadium voice. You ready for it? I don't. I don't know, 35 00:01:57,920 --> 00:02:06,880 Speaker 1: Gina Martin them, that's terrifying. Thank you this time on 36 00:02:06,960 --> 00:02:12,680 Speaker 1: Trillians Looking into the Crystal Ball with Gina Martin Adams. Gina, 37 00:02:12,760 --> 00:02:15,040 Speaker 1: welcome back to Trillians. Thank you, thank you for having me. 38 00:02:15,200 --> 00:02:18,680 Speaker 1: So good to see you in person. Yeah you, um so, 39 00:02:19,200 --> 00:02:22,120 Speaker 1: I remember the last time we talked, and it was 40 00:02:22,200 --> 00:02:26,400 Speaker 1: like you you went some places that I even you know, 41 00:02:26,680 --> 00:02:31,079 Speaker 1: reading Bloomberg coverage all day every day you blew my mind. Well, 42 00:02:31,120 --> 00:02:33,960 Speaker 1: thank you. So I want to talk about inflation. First, 43 00:02:34,280 --> 00:02:37,079 Speaker 1: you do a webinar called Inflation Nation. It has been 44 00:02:37,160 --> 00:02:39,800 Speaker 1: a thing that has been very spooky to the market 45 00:02:39,919 --> 00:02:44,160 Speaker 1: of late um and will remain, I think a source 46 00:02:44,160 --> 00:02:45,959 Speaker 1: of concern for a while. So, so break it down 47 00:02:46,000 --> 00:02:48,360 Speaker 1: for us. What what what's your perspective on it? And 48 00:02:48,440 --> 00:02:51,160 Speaker 1: what are people what should people be watching out for? Yeah, 49 00:02:51,320 --> 00:02:54,239 Speaker 1: so the reason we called the webinar Inflation Nation is 50 00:02:54,360 --> 00:02:58,120 Speaker 1: is because it's our US equity outlook. So just isolating 51 00:02:58,120 --> 00:03:01,760 Speaker 1: the US in the global equity market. The US as 52 00:03:01,880 --> 00:03:05,600 Speaker 1: inflation currently in the nineties percentile of history of the 53 00:03:05,800 --> 00:03:10,080 Speaker 1: entire history, the biggest CPR or pp I print on record. 54 00:03:10,400 --> 00:03:12,960 Speaker 1: Pp I was growing nine percent year over year as 55 00:03:13,000 --> 00:03:14,720 Speaker 1: of the last print. We've never seen a number like 56 00:03:14,760 --> 00:03:18,120 Speaker 1: that before. And everyone thinks that this is a one 57 00:03:18,160 --> 00:03:22,040 Speaker 1: time deal. They think that because we're seeing inflation peak 58 00:03:22,160 --> 00:03:24,480 Speaker 1: and it's going to come down, including the Federal Reserve. 59 00:03:25,600 --> 00:03:27,480 Speaker 1: As long as inflation is peaking now, it's going to 60 00:03:27,560 --> 00:03:29,320 Speaker 1: settle at a lower pace and all it's going to 61 00:03:29,400 --> 00:03:31,400 Speaker 1: be fine into the future. There's a word that gets 62 00:03:31,639 --> 00:03:34,520 Speaker 1: around a little bit transitory. Yeah, this transitory notion, So 63 00:03:34,520 --> 00:03:36,960 Speaker 1: we wanted to explore that. We talked through you know, 64 00:03:37,000 --> 00:03:39,120 Speaker 1: what do you do in an environment where inflation is 65 00:03:39,120 --> 00:03:42,880 Speaker 1: peaking and coming lower. But also really I question this 66 00:03:42,960 --> 00:03:45,839 Speaker 1: notion that we're going to settle at an inflation rate 67 00:03:45,840 --> 00:03:47,800 Speaker 1: that looks like the last cycle for a lot of 68 00:03:47,880 --> 00:03:52,360 Speaker 1: reasons um and most importantly in terms of implementing investment 69 00:03:52,400 --> 00:03:55,440 Speaker 1: strategy around inflation. I think this is a critical turning 70 00:03:55,480 --> 00:04:00,560 Speaker 1: point for cyclical sectors to continue to outperform defense sectors, 71 00:04:00,800 --> 00:04:04,800 Speaker 1: for value sectors to really take the leadership baton over tech, 72 00:04:05,280 --> 00:04:09,560 Speaker 1: consumer staples, large kept growth sectors. And it's because of 73 00:04:09,640 --> 00:04:12,760 Speaker 1: our sort of secular inflation outlook. I don't think we're 74 00:04:12,760 --> 00:04:18,080 Speaker 1: going back to experience at all. I think instead the 75 00:04:18,160 --> 00:04:20,800 Speaker 1: experience that we've had over the last couple of years 76 00:04:20,880 --> 00:04:23,680 Speaker 1: is setting us up for a much faster pace of 77 00:04:23,720 --> 00:04:27,480 Speaker 1: inflation into the long term outlook. So this whole transitory 78 00:04:27,480 --> 00:04:31,560 Speaker 1: discussion really takes away from the implementation of an adequate 79 00:04:31,680 --> 00:04:35,720 Speaker 1: investment strategy that can continue to perform well in an 80 00:04:35,760 --> 00:04:39,960 Speaker 1: environment where inflation is secularly shifting. It's not just about 81 00:04:39,960 --> 00:04:42,600 Speaker 1: this transitory argument, which everyone's focusing on because of the 82 00:04:42,640 --> 00:04:46,839 Speaker 1: short termism of markets in general. It's really about inflation 83 00:04:46,880 --> 00:04:48,800 Speaker 1: is going to settle at a faster pace. What do 84 00:04:48,880 --> 00:04:52,280 Speaker 1: you do because it's not the strategy that you had 85 00:04:52,440 --> 00:04:54,760 Speaker 1: from two thousand nine to twenty or two thousand ten. 86 00:04:56,279 --> 00:04:59,480 Speaker 1: And can you just explain why inflation being high would 87 00:04:59,520 --> 00:05:02,919 Speaker 1: be good for those cyclical sectors? Um and you know 88 00:05:02,960 --> 00:05:06,760 Speaker 1: you said value small cap national stocks. Why is it 89 00:05:06,760 --> 00:05:09,400 Speaker 1: good for those? So for a lot of different reasons, 90 00:05:09,680 --> 00:05:13,720 Speaker 1: it's better for cyclicals because higher inflation is probably going 91 00:05:13,760 --> 00:05:17,240 Speaker 1: to be driven as much by a faster demand cycle 92 00:05:17,320 --> 00:05:19,279 Speaker 1: than we've experienced in the past. Why are we going 93 00:05:19,360 --> 00:05:21,400 Speaker 1: to have faster demand growth? Why are we gonna have 94 00:05:21,440 --> 00:05:24,440 Speaker 1: faster GDP growth? In my mind, we're going to have 95 00:05:24,440 --> 00:05:28,120 Speaker 1: faster GDP growth partly because the private sector in the 96 00:05:28,200 --> 00:05:31,880 Speaker 1: United States is flush with cash. It's a completely polar 97 00:05:31,920 --> 00:05:34,159 Speaker 1: opposite the experience we had coming about out of the 98 00:05:34,160 --> 00:05:37,719 Speaker 1: Great Financial Crisis, when nobody had anything. Households were in 99 00:05:37,800 --> 00:05:41,360 Speaker 1: complete disrepair, they had no cash, they were really struggling 100 00:05:41,400 --> 00:05:46,320 Speaker 1: to get out from under extraordinary debtloads. Corporates likewise really 101 00:05:46,320 --> 00:05:48,479 Speaker 1: didn't have a tremendous amount of cash. They were able 102 00:05:48,520 --> 00:05:51,480 Speaker 1: to continue borrowing to fund growth, but they didn't have 103 00:05:51,520 --> 00:05:54,280 Speaker 1: all this cash stored up. As a function of the 104 00:05:54,320 --> 00:05:56,800 Speaker 1: fact that we had the most extraordinary expansion in fiscal 105 00:05:56,920 --> 00:06:02,320 Speaker 1: and monetary policy in US history, in households and corporates 106 00:06:02,360 --> 00:06:04,080 Speaker 1: in the United States are sitting on more cash than 107 00:06:04,120 --> 00:06:07,039 Speaker 1: they have ever had. The result of that, I think 108 00:06:07,400 --> 00:06:10,120 Speaker 1: is a long term cycle of much faster demand growth. 109 00:06:10,120 --> 00:06:12,360 Speaker 1: Everybody talks about the supply side. They talk about the 110 00:06:12,360 --> 00:06:14,640 Speaker 1: fact that, oh, supply chains are in disrepair and they're 111 00:06:14,640 --> 00:06:17,080 Speaker 1: going to get better. What nobody's talking about is the 112 00:06:17,120 --> 00:06:20,120 Speaker 1: fact that we're going to have faster GDP growth, probably 113 00:06:20,160 --> 00:06:22,400 Speaker 1: for a longer period of time than anyone is seen 114 00:06:22,480 --> 00:06:25,240 Speaker 1: in a long time. That is going to fuel a 115 00:06:25,320 --> 00:06:30,479 Speaker 1: much faster cycle, which generally benefits the faster earners. The 116 00:06:30,520 --> 00:06:33,600 Speaker 1: cyclical though, those segments of the market that are exposed 117 00:06:34,080 --> 00:06:38,039 Speaker 1: to the cycle, right, So that's part of it. Also, 118 00:06:38,120 --> 00:06:40,600 Speaker 1: when you have faster inflation, you generally assume the commodity 119 00:06:40,600 --> 00:06:44,520 Speaker 1: prices are on the up. Commodity sensitive sectors do particularly well. 120 00:06:45,040 --> 00:06:47,040 Speaker 1: We've been through a period of time in which capital 121 00:06:47,080 --> 00:06:50,599 Speaker 1: spending has been absolutely nothing. There's this coiled spring of 122 00:06:50,640 --> 00:06:54,400 Speaker 1: pent up demand for capital spending. That should improve the 123 00:06:54,480 --> 00:06:58,120 Speaker 1: outlook for industrial space. The big laggard in my mind 124 00:06:58,120 --> 00:07:01,200 Speaker 1: and this kind of market is tech. Nobody wants to 125 00:07:01,200 --> 00:07:03,440 Speaker 1: get out of their tech stocks. Everybody loves their tech stocks. 126 00:07:03,520 --> 00:07:07,320 Speaker 1: But I think that that era is largely over environment. 127 00:07:08,240 --> 00:07:10,840 Speaker 1: Part of it is because tech effectively operates as a 128 00:07:10,880 --> 00:07:14,440 Speaker 1: defensive strategy. Tech had faster growth when growth was slow, 129 00:07:15,600 --> 00:07:18,240 Speaker 1: all of the all of the growth sort of concentrated 130 00:07:18,320 --> 00:07:22,000 Speaker 1: in that one segment, right, And now that growth is 131 00:07:22,040 --> 00:07:26,560 Speaker 1: more equally distributed across segments, is more cyclically oriented, is 132 00:07:26,560 --> 00:07:32,800 Speaker 1: more industrially oriented. You have growth opportunities emerge in other spaces. Also, 133 00:07:33,160 --> 00:07:35,320 Speaker 1: when you have those sort of grower when you have 134 00:07:35,440 --> 00:07:38,760 Speaker 1: a very very slow growth environment, you're much more sensitive 135 00:07:39,320 --> 00:07:45,320 Speaker 1: two interest rates moving, You're much more sensitive to margins. Uh, 136 00:07:45,320 --> 00:07:49,440 Speaker 1: and tech has ample amounts of ability to borrow. They 137 00:07:49,520 --> 00:07:53,040 Speaker 1: also have higher margins. So they looked like the darlings 138 00:07:53,040 --> 00:07:55,400 Speaker 1: of the last cycle from a secular perspective, I don't 139 00:07:55,400 --> 00:07:57,600 Speaker 1: think they'll be the darlings of the next one. So 140 00:07:57,680 --> 00:08:02,840 Speaker 1: that was a pretty um us central yes explanation. What 141 00:08:03,200 --> 00:08:07,240 Speaker 1: about inflation elsewhere? Because um, you know, we won't be 142 00:08:07,320 --> 00:08:09,520 Speaker 1: alone if that ends up being the case. Yeah, So 143 00:08:09,680 --> 00:08:13,000 Speaker 1: what's fascinating right now is inflation really is almost a 144 00:08:13,080 --> 00:08:17,720 Speaker 1: US centric phenomenon. It is not happening at an above 145 00:08:17,760 --> 00:08:21,720 Speaker 1: average pace in roughly half of the globe. In much 146 00:08:21,800 --> 00:08:24,320 Speaker 1: of the globe outside of the United States, there's still 147 00:08:24,360 --> 00:08:29,440 Speaker 1: this UM really a significant struggle with rates of coronavirus 148 00:08:29,520 --> 00:08:34,040 Speaker 1: infection via this now next delta variant, also very low 149 00:08:34,120 --> 00:08:38,360 Speaker 1: vaccination rates. So the result is what happens in the 150 00:08:38,480 --> 00:08:41,199 Speaker 1: US is we have much faster inflation because our demand 151 00:08:41,240 --> 00:08:44,200 Speaker 1: growth is accelerating already. On top of that, you have 152 00:08:44,280 --> 00:08:46,600 Speaker 1: much faster inflation because the rest of the world can't 153 00:08:46,640 --> 00:08:49,640 Speaker 1: supply us with the goods that we've become so accustomed 154 00:08:49,640 --> 00:08:52,080 Speaker 1: to getting from the rest of the world. So it 155 00:08:52,160 --> 00:08:55,520 Speaker 1: amplifies the problem for the US. Really, the concentration of 156 00:08:55,600 --> 00:09:00,959 Speaker 1: risk is in developed markets US, Canada, maybe Germany, where 157 00:09:01,080 --> 00:09:04,440 Speaker 1: you have pretty strong rates of vaccination. You also have 158 00:09:05,240 --> 00:09:11,320 Speaker 1: some import dependence, some goods price sensitivity still UM and 159 00:09:11,480 --> 00:09:14,520 Speaker 1: it's very concentrated. It's definitely not a global phenomenon. Most 160 00:09:14,520 --> 00:09:17,360 Speaker 1: of Asia, for instance, has below average inflation prints still. 161 00:09:18,080 --> 00:09:21,080 Speaker 1: So you just talked about these areas that were cyclical 162 00:09:21,120 --> 00:09:24,320 Speaker 1: and and i'll I call them the bench players, value, 163 00:09:24,360 --> 00:09:27,360 Speaker 1: small caps and emerging markets. They've been bad for ten years. 164 00:09:27,920 --> 00:09:29,719 Speaker 1: At the beginning of the year they started to break out. 165 00:09:30,200 --> 00:09:33,280 Speaker 1: Your call was exactly right. In fact, listen this that 166 00:09:33,400 --> 00:09:36,760 Speaker 1: those three areas and ETFs contributed about thirty three percent 167 00:09:36,800 --> 00:09:40,040 Speaker 1: of the flows up through June, but since then only 168 00:09:40,040 --> 00:09:42,960 Speaker 1: two the whole trade, all of those have just fallen 169 00:09:42,960 --> 00:09:46,000 Speaker 1: off a cliff basically, and this sort of tech growth 170 00:09:46,040 --> 00:09:48,480 Speaker 1: has re emerged, you know, ARC and that whole trade, 171 00:09:48,480 --> 00:09:51,480 Speaker 1: the cues And that's been about six weeks now, right, 172 00:09:52,520 --> 00:09:55,199 Speaker 1: You think that's just that's the head fake. It wasn't 173 00:09:55,200 --> 00:09:57,960 Speaker 1: that the five months before was just another long head 174 00:09:57,960 --> 00:10:00,040 Speaker 1: fake from value. Yep. I think that the head it 175 00:10:00,200 --> 00:10:01,679 Speaker 1: is the last six d eight weeks, and it may 176 00:10:01,760 --> 00:10:03,920 Speaker 1: last for another six day eight weeks. It may last 177 00:10:03,960 --> 00:10:07,040 Speaker 1: even longer than that. But it ultimately to me is 178 00:10:07,200 --> 00:10:10,400 Speaker 1: we probably got a little bit too over inflated in 179 00:10:10,400 --> 00:10:14,680 Speaker 1: our expectations near term for inflation to really break out 180 00:10:14,679 --> 00:10:17,559 Speaker 1: in the short term. Inflation indicators peaked in the short 181 00:10:17,679 --> 00:10:20,640 Speaker 1: term as of May June, and that took some of 182 00:10:20,679 --> 00:10:23,360 Speaker 1: the window of the sales of the cyclical value trade. 183 00:10:24,040 --> 00:10:28,920 Speaker 1: That said, none of the long term charts have really crashed, 184 00:10:29,280 --> 00:10:32,920 Speaker 1: especially for things like value and financials. Small caps is 185 00:10:32,960 --> 00:10:37,000 Speaker 1: trading sideways. Emerging markets has been pretty poor, So it's 186 00:10:37,000 --> 00:10:39,599 Speaker 1: the laggard in that grand scheme of things. But I 187 00:10:40,000 --> 00:10:42,599 Speaker 1: attribute a lot of that to what's happening with vaccinations, 188 00:10:43,320 --> 00:10:46,640 Speaker 1: and in my mind, the opportunity is still there. It's 189 00:10:46,679 --> 00:10:48,959 Speaker 1: just a matter of time before the vaccination has become 190 00:10:49,000 --> 00:10:51,320 Speaker 1: well distributed and those economies can start to make their 191 00:10:51,320 --> 00:10:54,240 Speaker 1: way back. But and to that point, um, you know, 192 00:10:54,280 --> 00:10:56,280 Speaker 1: when you think of inflation going up, I tend to 193 00:10:56,280 --> 00:10:59,760 Speaker 1: think interest rates would be correlated with that. But the again, 194 00:10:59,800 --> 00:11:02,640 Speaker 1: the past six weeks, rates have dropped and so we've 195 00:11:02,640 --> 00:11:05,560 Speaker 1: had a Russianto Treasury e t f S. Again. You 196 00:11:05,600 --> 00:11:08,560 Speaker 1: think that is a temporary Yeah, I think it's a 197 00:11:08,559 --> 00:11:11,000 Speaker 1: function of the fact that inflation expectations peaked in the 198 00:11:11,000 --> 00:11:13,800 Speaker 1: short term. Um, I think the Fed has played a 199 00:11:13,840 --> 00:11:15,880 Speaker 1: little bit of a part in this as well, because 200 00:11:15,960 --> 00:11:19,040 Speaker 1: the bond market is appears to be starting to get 201 00:11:19,040 --> 00:11:21,319 Speaker 1: a little bit worried about the FED normalizing policy, and 202 00:11:21,360 --> 00:11:23,520 Speaker 1: the bond market is doing what it does every time 203 00:11:23,640 --> 00:11:26,080 Speaker 1: over the last ten years. Anytime the Fed's talked about 204 00:11:26,120 --> 00:11:28,720 Speaker 1: normalizing policy, everybody ran into bonds. You know, there's just 205 00:11:28,760 --> 00:11:31,280 Speaker 1: a big tantrum, and they they just think, oh my god, 206 00:11:31,520 --> 00:11:34,839 Speaker 1: without the Fed, how can we possibly survive this? And 207 00:11:34,920 --> 00:11:37,920 Speaker 1: so everyone rushes back into bonds. And then we realize, oh, 208 00:11:37,960 --> 00:11:40,360 Speaker 1: actually the economy is still fine. It's just it's just 209 00:11:40,440 --> 00:11:43,000 Speaker 1: a matter of time. In my mind, is there's just 210 00:11:43,040 --> 00:11:46,240 Speaker 1: a little bit of a freak out in the short term. 211 00:11:46,280 --> 00:11:48,880 Speaker 1: I think it's great, frankly for the longevity of the 212 00:11:48,920 --> 00:11:51,480 Speaker 1: trade that folks are so paranoid that it was a 213 00:11:51,600 --> 00:11:54,000 Speaker 1: short term blip. The value rally was such a short 214 00:11:54,120 --> 00:11:56,160 Speaker 1: term blip, and when we look at the long term charts, 215 00:11:57,040 --> 00:12:02,120 Speaker 1: it was barely even a recovery. Value factor is still 216 00:12:02,200 --> 00:12:06,000 Speaker 1: extremely cheap relative to the rest of the factors, so 217 00:12:06,960 --> 00:12:08,880 Speaker 1: I think, but you do have to have a view 218 00:12:08,920 --> 00:12:11,199 Speaker 1: that you're going to settle into a longer term, a 219 00:12:11,280 --> 00:12:13,600 Speaker 1: higher pace of inflation longer term, and that rates are 220 00:12:13,640 --> 00:12:15,720 Speaker 1: ultimately going to go higher in order for the value 221 00:12:15,720 --> 00:12:17,440 Speaker 1: trade to work. I think that the market is just 222 00:12:17,640 --> 00:12:20,240 Speaker 1: sort of really struggling with that view right now. And 223 00:12:20,400 --> 00:12:22,920 Speaker 1: in e. T. F Land, if you were gonna, you know, 224 00:12:23,320 --> 00:12:26,319 Speaker 1: take that thesis and run with it. Who who potentially 225 00:12:26,320 --> 00:12:29,880 Speaker 1: looks like the big winners and breakout stars. Yeah so again, 226 00:12:30,080 --> 00:12:33,360 Speaker 1: value ets have taken in fifty four billion dollars through me. 227 00:12:33,520 --> 00:12:36,920 Speaker 1: Their old annual record is thirty so they're through half 228 00:12:36,920 --> 00:12:40,160 Speaker 1: a year. They've broken the annual record by almost That's 229 00:12:40,240 --> 00:12:44,000 Speaker 1: the how crazy people got for value. I just worry, 230 00:12:44,080 --> 00:12:46,400 Speaker 1: you know, in small caps too, although to a lesser extent, 231 00:12:46,440 --> 00:12:49,079 Speaker 1: but value et f s in particular, a lot of 232 00:12:49,120 --> 00:12:50,840 Speaker 1: the flows and e t F are off these models 233 00:12:50,880 --> 00:12:52,400 Speaker 1: that have these signals, and a lot of them are 234 00:12:52,400 --> 00:12:54,800 Speaker 1: technically driven. And I do wonder because I've seen a 235 00:12:54,840 --> 00:12:58,000 Speaker 1: couple little it's almost like spring leaks and the dam 236 00:12:58,040 --> 00:12:59,959 Speaker 1: of flows out of the value et F And I'm 237 00:13:00,000 --> 00:13:04,160 Speaker 1: wondering if value crushes between some moving averages, do the 238 00:13:04,240 --> 00:13:06,640 Speaker 1: models get triggered and all of a sudden it's this 239 00:13:06,720 --> 00:13:10,480 Speaker 1: downward spiral. And it's worse because it seems to be 240 00:13:10,520 --> 00:13:12,600 Speaker 1: six weeks you start to get to a point where 241 00:13:13,040 --> 00:13:15,920 Speaker 1: the technicals break down though, yeah you do. And there's 242 00:13:15,920 --> 00:13:18,959 Speaker 1: also this coincidence of value and momentum right now where 243 00:13:19,120 --> 00:13:22,720 Speaker 1: if momentum breaks lower, it's going to be because value 244 00:13:22,760 --> 00:13:26,840 Speaker 1: is breaking lower and vice versa. So there's some additional 245 00:13:26,960 --> 00:13:30,640 Speaker 1: risk because value stocks became momentum stocks. In the short run, 246 00:13:31,320 --> 00:13:33,720 Speaker 1: that's set. As long as they hold a long term trend, 247 00:13:34,320 --> 00:13:38,520 Speaker 1: then the sky's the limit. There's so much head. But 248 00:13:38,760 --> 00:13:41,120 Speaker 1: by the way, um there's an e t F called 249 00:13:41,200 --> 00:13:43,040 Speaker 1: m t U M, which is the ires momentum. It's 250 00:13:43,040 --> 00:13:46,079 Speaker 1: the biggest momentum ETF in the world. Really, it only 251 00:13:46,120 --> 00:13:49,199 Speaker 1: rebounces once every six months. And it went from all 252 00:13:49,400 --> 00:13:54,120 Speaker 1: these tech and growthy sectors into financials and sort of 253 00:13:54,120 --> 00:13:59,480 Speaker 1: more defensive areas. On May thirty one, literally the day later, 254 00:13:59,760 --> 00:14:02,760 Speaker 1: the whole thing reversed. It was like it might be 255 00:14:02,840 --> 00:14:07,040 Speaker 1: the worst rebalance in history. Although if Gina's prophecy turns out, 256 00:14:07,200 --> 00:14:10,119 Speaker 1: it'll all work out. But that's the thing about rebalances 257 00:14:10,160 --> 00:14:13,200 Speaker 1: that every six you know, summer quarterly, summer monthly somewhere, 258 00:14:13,400 --> 00:14:16,320 Speaker 1: but as semi annual, you're locked into those stocks. And 259 00:14:16,320 --> 00:14:18,559 Speaker 1: you're right, momentum and value are kind of tied together 260 00:14:18,600 --> 00:14:20,560 Speaker 1: for a while, right yeah, And and that's going to 261 00:14:20,720 --> 00:14:23,400 Speaker 1: create that could create some turmoil short term, but it 262 00:14:23,440 --> 00:14:27,080 Speaker 1: also could create a much longer term tailwind that everybody's ignoring, 263 00:14:27,360 --> 00:14:31,960 Speaker 1: right momentum typically is a pretty good strategy. It just 264 00:14:32,040 --> 00:14:34,360 Speaker 1: breaks every now and then. But longer term, if you're 265 00:14:34,360 --> 00:14:37,440 Speaker 1: in if you're in the momentum stocks, you're generally outperforming. 266 00:14:38,160 --> 00:14:39,960 Speaker 1: We've been it's been a long time since we've been 267 00:14:39,960 --> 00:14:43,160 Speaker 1: in a market where momentum and value together worked as well. 268 00:14:43,200 --> 00:14:45,520 Speaker 1: But if you look over the long term history, those 269 00:14:45,560 --> 00:14:48,240 Speaker 1: are the magic. That's sort of the magic sauce, if 270 00:14:48,280 --> 00:14:50,560 Speaker 1: you will, is to have some momentum and value exposure 271 00:14:50,560 --> 00:15:02,440 Speaker 1: in your portfolio usually outperforms a broader market and momentum. 272 00:15:02,600 --> 00:15:05,440 Speaker 1: When the academics and the practitioners do it, they usually 273 00:15:05,920 --> 00:15:08,480 Speaker 1: don't use the last month, Yes, and it's for this 274 00:15:08,560 --> 00:15:12,400 Speaker 1: reason because there's these noise and head fakes. Right, So 275 00:15:13,280 --> 00:15:15,600 Speaker 1: again though we're now beyond a month, though, so we 276 00:15:15,640 --> 00:15:18,920 Speaker 1: are getting into a point where it's possible he starts 277 00:15:18,960 --> 00:15:21,720 Speaker 1: to show up. It does I you know, I think 278 00:15:21,720 --> 00:15:24,880 Speaker 1: that it's it's a tricky market. Also because the delta 279 00:15:24,960 --> 00:15:26,760 Speaker 1: variant has played a part of this. Right. We talk 280 00:15:26,800 --> 00:15:29,960 Speaker 1: a lot about inflation expectations, but the fact that we 281 00:15:30,000 --> 00:15:34,640 Speaker 1: saw infections rising around the world again did create a 282 00:15:34,800 --> 00:15:39,160 Speaker 1: flight back into defensive strategies. But when you see things 283 00:15:39,240 --> 00:15:42,760 Speaker 1: like the big famig stocks, the biggest stocks in the 284 00:15:42,840 --> 00:15:46,920 Speaker 1: SMP five, all tech centrics still commanding an extraordinary premium 285 00:15:46,920 --> 00:15:48,520 Speaker 1: over the rest of the index. When you see the 286 00:15:48,560 --> 00:15:51,800 Speaker 1: US still expanding, commanding a premium of the rest of 287 00:15:51,800 --> 00:15:53,600 Speaker 1: the world, even though earnings are not going to grow 288 00:15:53,640 --> 00:15:55,600 Speaker 1: faster than the rest of the world over the next 289 00:15:55,640 --> 00:15:59,040 Speaker 1: twelve months, you know that there's some imbalance, and ultimately 290 00:15:59,600 --> 00:16:04,320 Speaker 1: these in balances reconcile themselves. Um. I think right now, 291 00:16:04,400 --> 00:16:06,480 Speaker 1: you've gotta You're just at a point in time where 292 00:16:06,600 --> 00:16:10,640 Speaker 1: very consistently, when infections are rising, US stocks outperform, and 293 00:16:10,640 --> 00:16:13,160 Speaker 1: when infections are following, US stocks underperform. You gotta get 294 00:16:13,160 --> 00:16:16,200 Speaker 1: to a point where infections peak again. It's so simplistic, 295 00:16:16,640 --> 00:16:20,640 Speaker 1: but it just works, and people move defensively as infections 296 00:16:20,640 --> 00:16:23,320 Speaker 1: are rising, and as soon as they peak, they start 297 00:16:23,320 --> 00:16:25,640 Speaker 1: to move offensively again. And I just think that's played 298 00:16:25,640 --> 00:16:28,320 Speaker 1: a huge part of the last month, probably six weeks, 299 00:16:28,320 --> 00:16:32,080 Speaker 1: maybe even eight weeks, where folks get worried about this 300 00:16:32,160 --> 00:16:35,360 Speaker 1: delta variant and they play that strategy. But it's very 301 00:16:35,360 --> 00:16:38,280 Speaker 1: short term. I mean, longer term, I think many of 302 00:16:38,320 --> 00:16:41,320 Speaker 1: us feel pretty optimistic that ultimately we're gonna get vaccinated. 303 00:16:41,320 --> 00:16:43,280 Speaker 1: We're going to figure this out and things are going 304 00:16:43,320 --> 00:16:46,120 Speaker 1: to change. At the same time, you cannot ignore the 305 00:16:46,160 --> 00:16:49,840 Speaker 1: fact that policymakers are completely on your side. You know, 306 00:16:50,360 --> 00:16:53,400 Speaker 1: there's just it kind of blows my mind, frankly, that 307 00:16:53,440 --> 00:16:56,480 Speaker 1: we're this far into recovery and the FEED is still 308 00:16:56,520 --> 00:17:00,600 Speaker 1: operating a crisis era monetary policy. We're still talking about 309 00:17:00,640 --> 00:17:03,920 Speaker 1: spending more money out of fiscal policy, despite the fact 310 00:17:04,000 --> 00:17:06,080 Speaker 1: that we're at all time high share of GDP in 311 00:17:06,119 --> 00:17:09,679 Speaker 1: fiscal spending. Now, you know, I could go into my 312 00:17:09,800 --> 00:17:12,640 Speaker 1: Boomarati theory right now, but why don't you ask about 313 00:17:12,640 --> 00:17:20,240 Speaker 1: the FED? Bomerti is so tempting, But I mean, listen 314 00:17:20,240 --> 00:17:21,480 Speaker 1: to that. We're just gonna put it on a show. 315 00:17:22,280 --> 00:17:24,040 Speaker 1: I'm trying to make this a thing. Yeah, we're gonna 316 00:17:24,080 --> 00:17:28,119 Speaker 1: come right back to it. Okay. So, so the FED 317 00:17:28,400 --> 00:17:33,280 Speaker 1: Chairman j Pal going to be probably uh at the 318 00:17:33,280 --> 00:17:35,840 Speaker 1: FED a little bit longer, although you know, maybe maybe 319 00:17:35,920 --> 00:17:37,840 Speaker 1: jury is still out just a little bit longer on that, 320 00:17:37,920 --> 00:17:40,040 Speaker 1: But that will be a topic of conversation in the 321 00:17:40,040 --> 00:17:43,800 Speaker 1: coming weeks. What do we expect um from the FED 322 00:17:43,880 --> 00:17:46,080 Speaker 1: and and like there will be some shake up, like 323 00:17:46,119 --> 00:17:47,800 Speaker 1: not everybody in in the FED will be in the 324 00:17:47,840 --> 00:17:50,680 Speaker 1: same places when they get done playing musical chairs, right, 325 00:17:50,920 --> 00:17:53,640 Speaker 1: So so what can we expect. I mean, obviously, as 326 00:17:53,680 --> 00:17:57,879 Speaker 1: you just said, we've had a really devish run. Is 327 00:17:57,880 --> 00:18:01,840 Speaker 1: there any reason to believe that turns hawkish really quickly 328 00:18:02,080 --> 00:18:06,040 Speaker 1: with inflation on the rise? No, you know, I think 329 00:18:06,080 --> 00:18:08,480 Speaker 1: that the FETE has made it really clear. They've they've 330 00:18:08,520 --> 00:18:11,040 Speaker 1: started to move the needle on what will make them 331 00:18:11,240 --> 00:18:15,840 Speaker 1: change policy as well, and they've started to basically guide 332 00:18:15,880 --> 00:18:18,880 Speaker 1: the market to say, look, we're willing to tolerate much 333 00:18:18,920 --> 00:18:22,879 Speaker 1: faster inflation than we have in the past. We want 334 00:18:22,960 --> 00:18:27,200 Speaker 1: to resolve social inequities. This is not language that we've 335 00:18:27,240 --> 00:18:30,440 Speaker 1: typically heard from the FED, maybe even since the nineteen sixties. 336 00:18:30,440 --> 00:18:34,399 Speaker 1: This has not been a huge portion of of monetary 337 00:18:34,440 --> 00:18:40,199 Speaker 1: policy making. We're gonna use average inflation prints. Um, you know, 338 00:18:40,320 --> 00:18:43,639 Speaker 1: the standard inflation measures are inadequate. So this is a 339 00:18:43,640 --> 00:18:46,399 Speaker 1: lot to all of this to me, says this FETE 340 00:18:46,480 --> 00:18:49,119 Speaker 1: is going to remain easy to force the hand of 341 00:18:49,160 --> 00:18:52,280 Speaker 1: inflation to be higher than it has been in a 342 00:18:52,400 --> 00:18:55,520 Speaker 1: very long time. And the FETE is very supportive of 343 00:18:55,520 --> 00:18:58,760 Speaker 1: inflation strategies. Now, will they ultimately have to catch up 344 00:18:58,800 --> 00:19:04,040 Speaker 1: and probably create a slightly more painful environment for risk taking. Yes, 345 00:19:05,160 --> 00:19:07,440 Speaker 1: but is it going to be within the near term. No, because, 346 00:19:07,560 --> 00:19:09,800 Speaker 1: especially if you think about what's going to happen next week, 347 00:19:10,200 --> 00:19:12,760 Speaker 1: what's your immediate thing to say. If you're a Federal 348 00:19:12,800 --> 00:19:15,080 Speaker 1: Reserve chairman that wants to air on the side of dubblishness, 349 00:19:15,200 --> 00:19:18,879 Speaker 1: you talk about the delta variant threatening growth, and you 350 00:19:18,920 --> 00:19:21,520 Speaker 1: talk about how we're you know, we're not a certain 351 00:19:21,560 --> 00:19:22,960 Speaker 1: that things are going to be better, so we don't 352 00:19:23,000 --> 00:19:26,920 Speaker 1: need to worry about easing policy. Um. So I think 353 00:19:26,920 --> 00:19:29,000 Speaker 1: that the excuse wagon can go on for a very 354 00:19:29,040 --> 00:19:31,439 Speaker 1: long time, especially if inflation rates are peaking in the 355 00:19:31,440 --> 00:19:34,520 Speaker 1: near term. As long as those inflation rates are coming down, 356 00:19:34,560 --> 00:19:38,080 Speaker 1: there's just no reason for them to get two concerned 357 00:19:38,240 --> 00:19:40,199 Speaker 1: and and they've told us they're not going to be 358 00:19:40,359 --> 00:19:42,800 Speaker 1: so there's no reason to air on, you know, any 359 00:19:42,800 --> 00:19:45,800 Speaker 1: other way. Now. Personally, I think they should be tightening 360 00:19:45,840 --> 00:19:48,520 Speaker 1: like crazy already, because I think that the economy is 361 00:19:48,560 --> 00:19:52,280 Speaker 1: absolutely on fire and no one wants to acknowledge it. 362 00:19:52,359 --> 00:19:56,560 Speaker 1: For whatever reason. It's very unpopular to do. Um. But 363 00:19:56,800 --> 00:19:59,240 Speaker 1: they're not going to well what okay, so let me 364 00:19:59,320 --> 00:20:02,359 Speaker 1: drop the theory on you, okay, because are you going? 365 00:20:04,760 --> 00:20:08,600 Speaker 1: I am so okay? The U S stock market is 366 00:20:08,640 --> 00:20:12,120 Speaker 1: the since we went to four one K plans, all 367 00:20:12,160 --> 00:20:14,800 Speaker 1: of our money is now in this in the stock market. 368 00:20:14,840 --> 00:20:18,200 Speaker 1: That's we don't have pensions anymore. And so isn't there 369 00:20:18,240 --> 00:20:20,120 Speaker 1: a theory that the FED can't let it go down? 370 00:20:20,160 --> 00:20:21,919 Speaker 1: And then if you think who owns the U. S 371 00:20:21,920 --> 00:20:25,320 Speaker 1: Stock market? I don't know, number I think of. It 372 00:20:25,400 --> 00:20:28,600 Speaker 1: is owned by boomers. First of all, only percent of 373 00:20:28,600 --> 00:20:31,399 Speaker 1: the country owned stocks. So by the FED pumping up stocks, 374 00:20:31,440 --> 00:20:34,800 Speaker 1: you are leaving behind. That's a whole another story, that's 375 00:20:34,840 --> 00:20:38,399 Speaker 1: the wealth gap. But by keeping that, yeah, and by 376 00:20:38,480 --> 00:20:42,439 Speaker 1: keeping the fifty up, you certainly are allowing the retirement 377 00:20:42,520 --> 00:20:46,600 Speaker 1: funds of America to be cool. And since the boomers 378 00:20:46,640 --> 00:20:49,320 Speaker 1: have almost all of that money, and the boomers are 379 00:20:49,359 --> 00:20:52,120 Speaker 1: totally in power, whether it's Trump or Biden, they're both boomers, 380 00:20:52,359 --> 00:20:54,840 Speaker 1: whether it's Pal, whether it's the people leading the big 381 00:20:54,880 --> 00:20:57,720 Speaker 1: asset managers, and a lot of them go and work 382 00:20:57,720 --> 00:20:59,800 Speaker 1: with each other, like one person will leave the FED 383 00:20:59,840 --> 00:21:03,080 Speaker 1: and go work at black Rock and vice versa. Is 384 00:21:03,119 --> 00:21:06,320 Speaker 1: there what about this theory that I called the boomarati? 385 00:21:06,359 --> 00:21:08,760 Speaker 1: Maybe there's a better word for it, that that class 386 00:21:08,800 --> 00:21:11,960 Speaker 1: of people in power will never let the stock market 387 00:21:11,960 --> 00:21:18,080 Speaker 1: go down. They can't. It's their retirement money. Well, Mike dropped. 388 00:21:18,080 --> 00:21:20,640 Speaker 1: I stumped her. She never thought of it's that crazy 389 00:21:21,240 --> 00:21:25,960 Speaker 1: the mic has made of tinfoil um. So I don't 390 00:21:26,119 --> 00:21:30,560 Speaker 1: think that that it's possible to never let the stock 391 00:21:30,600 --> 00:21:34,320 Speaker 1: market go down. Right, the stock market crash and three 392 00:21:34,320 --> 00:21:38,560 Speaker 1: weeks last year it crashed more times in the last 393 00:21:38,600 --> 00:21:41,040 Speaker 1: ten year. We had more corrections in the last ten 394 00:21:41,119 --> 00:21:43,360 Speaker 1: years than in any ten years in history. Well, when 395 00:21:43,359 --> 00:21:45,960 Speaker 1: I say crash, I mean like a real, a real 396 00:21:46,040 --> 00:21:48,159 Speaker 1: good one, a one that rips your face off, Like 397 00:21:48,359 --> 00:21:51,040 Speaker 1: we had a fifty percent crash in two thousand eight, 398 00:21:51,080 --> 00:21:54,520 Speaker 1: another fifty percent crash in two thousand, two thousands. These 399 00:21:54,560 --> 00:21:58,080 Speaker 1: have we have actually been through over the last twenty years. 400 00:21:58,080 --> 00:22:01,240 Speaker 1: The reality of the situations were not the FED was 401 00:22:01,280 --> 00:22:04,800 Speaker 1: not really coddling the market in those two crashes. Oh, 402 00:22:04,840 --> 00:22:07,760 Speaker 1: they definitely coddled the market all the way through because 403 00:22:07,800 --> 00:22:11,560 Speaker 1: we had Scott Um. I forget the increasingly coddled the market. 404 00:22:11,560 --> 00:22:13,800 Speaker 1: I will agree with you there, but they've they've coddled 405 00:22:13,840 --> 00:22:15,560 Speaker 1: the market all the way through. And yet the twenty. 406 00:22:15,640 --> 00:22:17,639 Speaker 1: The past twenty years, we've been in a bull market, 407 00:22:17,680 --> 00:22:23,960 Speaker 1: but it's been a very volatile and frankly, extremely difficult 408 00:22:24,040 --> 00:22:26,400 Speaker 1: bowl market to make money, and because you've had these 409 00:22:26,560 --> 00:22:31,639 Speaker 1: very frequent and very vicious corrections in the equity market. Now, 410 00:22:32,280 --> 00:22:34,919 Speaker 1: I think that the equity market historically goes through massive 411 00:22:34,920 --> 00:22:37,959 Speaker 1: bull phases and massive bare phases, and we just happened 412 00:22:37,960 --> 00:22:39,800 Speaker 1: to be in a massive bull phase. Is it all 413 00:22:39,840 --> 00:22:43,280 Speaker 1: because of the FED? I don't necessarily believe that. And 414 00:22:44,040 --> 00:22:46,240 Speaker 1: you know, I do think that there are financial centers 415 00:22:46,280 --> 00:22:49,480 Speaker 1: of power, and you know, I would love to glom 416 00:22:49,520 --> 00:22:52,920 Speaker 1: onto a generational sort of battle, but I'm not sure. 417 00:22:54,560 --> 00:22:57,439 Speaker 1: I'm not I'm just I'm just not sure that you 418 00:22:57,480 --> 00:23:01,440 Speaker 1: know that there is anything people too much. The FED 419 00:23:01,520 --> 00:23:03,680 Speaker 1: does get very sensitive. To be fair, though, the FED 420 00:23:03,760 --> 00:23:06,280 Speaker 1: does get very sensitive to corrections in the equity market, 421 00:23:06,320 --> 00:23:08,440 Speaker 1: and the fact that they respond as fast as they do, 422 00:23:09,160 --> 00:23:11,400 Speaker 1: I would suggest that they do believe the equity market 423 00:23:11,440 --> 00:23:14,600 Speaker 1: has something to say about the economic outlook. Let's just 424 00:23:14,680 --> 00:23:17,000 Speaker 1: leave it at that from me, Yeah, And we asked 425 00:23:17,040 --> 00:23:19,680 Speaker 1: the Janis twenty manager who was managing that fun in 426 00:23:21,000 --> 00:23:23,679 Speaker 1: two thousand when the Internet bubble burst and it went 427 00:23:23,720 --> 00:23:26,040 Speaker 1: down fifty, as you said, and we asked him in 428 00:23:26,040 --> 00:23:28,200 Speaker 1: our interview, you know, did did you ever did do 429 00:23:28,280 --> 00:23:29,840 Speaker 1: you go through your mind that the FED would step 430 00:23:29,840 --> 00:23:32,080 Speaker 1: in and help? And he goes, no, I never had 431 00:23:32,119 --> 00:23:35,959 Speaker 1: that thought. Now it's if markets now five percent off, 432 00:23:35,960 --> 00:23:38,120 Speaker 1: it's all time highest. People like, where's the FED? So 433 00:23:38,320 --> 00:23:41,440 Speaker 1: I also think the investor base is now a little spoiled. Well, 434 00:23:41,480 --> 00:23:44,280 Speaker 1: it's also the market is very correlated to what happens 435 00:23:44,280 --> 00:23:47,320 Speaker 1: in the FED. The market is obviously clearly you know, 436 00:23:47,880 --> 00:23:52,440 Speaker 1: bought into the idea that the FED is a credible 437 00:23:52,560 --> 00:23:55,760 Speaker 1: driver of stock prices to some degree at least. I mean, 438 00:23:55,840 --> 00:23:58,040 Speaker 1: every time they've tried to normalize the balance sheet, it's 439 00:23:58,080 --> 00:24:01,640 Speaker 1: created turmoil for stocks. In both two thousand and eight 440 00:24:01,760 --> 00:24:06,000 Speaker 1: and in as soon as the FEDS stepped in with 441 00:24:06,200 --> 00:24:09,920 Speaker 1: massive intervention, it created a new upswing. So it's very 442 00:24:09,960 --> 00:24:13,560 Speaker 1: relevant for sure. One of the things that you tell 443 00:24:13,600 --> 00:24:15,520 Speaker 1: me sometimes, and I also see people talk about on 444 00:24:15,560 --> 00:24:18,800 Speaker 1: twitters who's leading? Who is the bond market leading the 445 00:24:18,800 --> 00:24:23,160 Speaker 1: stock market or is the stock market leading the bond market? Um, 446 00:24:23,200 --> 00:24:25,000 Speaker 1: I think a lot of the bond world is a 447 00:24:25,040 --> 00:24:27,600 Speaker 1: mystery to most regular people too. I think stocks are more. 448 00:24:27,760 --> 00:24:30,119 Speaker 1: I don't know in their face, but um, can you 449 00:24:30,200 --> 00:24:33,800 Speaker 1: talk about that and where you think that stands right now? Um? 450 00:24:33,840 --> 00:24:36,600 Speaker 1: I do think the bond market generally leads the stock market. 451 00:24:37,320 --> 00:24:40,240 Speaker 1: I mean, look, obviously, the cost capital is determined in 452 00:24:40,320 --> 00:24:42,359 Speaker 1: large part by where interest rates are, so the bond 453 00:24:42,359 --> 00:24:45,959 Speaker 1: market does matter. Where I think we lose the plot 454 00:24:46,040 --> 00:24:49,959 Speaker 1: a little bit is in the long term perspective. So 455 00:24:50,040 --> 00:24:54,720 Speaker 1: for the last twenty years, stocks prices and bond yields 456 00:24:54,720 --> 00:24:58,160 Speaker 1: have been very positively correlated. So when bond yields rise, 457 00:24:58,200 --> 00:25:01,560 Speaker 1: stock prices rise, and vice versa. The twenty years prior 458 00:25:01,600 --> 00:25:04,600 Speaker 1: to that, it was the opposite scenario. What's the big 459 00:25:04,640 --> 00:25:07,240 Speaker 1: difference there? For the last twenty years, we've been contending 460 00:25:07,240 --> 00:25:10,520 Speaker 1: with deflation disinflation. For the twenty years prior to that, 461 00:25:10,600 --> 00:25:14,160 Speaker 1: the general psychology was we are inflation is a bad thing, 462 00:25:15,240 --> 00:25:19,080 Speaker 1: right that that psychological shift or real economic shift even 463 00:25:19,640 --> 00:25:22,359 Speaker 1: created a very different relationship between stocks and bonds. And 464 00:25:22,359 --> 00:25:23,760 Speaker 1: I think you want to keep your eye on this 465 00:25:23,960 --> 00:25:26,480 Speaker 1: very carefully going forward, because in my view, we could 466 00:25:26,560 --> 00:25:30,439 Speaker 1: be at a critical turning point where at some point 467 00:25:31,600 --> 00:25:34,600 Speaker 1: rising bond dealds is no longer a good thing for stocks. 468 00:25:35,240 --> 00:25:37,959 Speaker 1: It's not any time soon. Right now, we still need bonding. 469 00:25:38,000 --> 00:25:40,359 Speaker 1: We can still tolerate much higher bond dealds from where 470 00:25:40,359 --> 00:25:42,720 Speaker 1: we are, and the bond market will likely lead the 471 00:25:42,760 --> 00:25:45,840 Speaker 1: stock market because higher bond deilds is great, It indicates 472 00:25:45,840 --> 00:25:50,840 Speaker 1: an improving economic outlook, improving sentiment toward risk. Lower bond 473 00:25:50,840 --> 00:25:54,200 Speaker 1: deals is generally not so good. Generally leads to worsening 474 00:25:54,480 --> 00:25:57,920 Speaker 1: economic conditions, and the bond market is usually pretty keen 475 00:25:58,880 --> 00:26:03,879 Speaker 1: to forecast is correctly love that. Uh, as long as 476 00:26:03,920 --> 00:26:06,280 Speaker 1: we're talking about relationships, are there any other ones? This 477 00:26:06,320 --> 00:26:08,200 Speaker 1: is what I'm talking about, like going big with Gina. 478 00:26:08,440 --> 00:26:12,199 Speaker 1: Are there any other relationships like that that you you 479 00:26:12,240 --> 00:26:15,399 Speaker 1: think a student investors should be watching going forward? There 480 00:26:15,440 --> 00:26:18,879 Speaker 1: are quite a few. Actually. Um, that's the That's the 481 00:26:19,000 --> 00:26:23,400 Speaker 1: big overwhelming secular relationship that I think is absolutely most 482 00:26:23,440 --> 00:26:26,399 Speaker 1: important to keep your eye on. Uh. The other thing 483 00:26:26,480 --> 00:26:27,679 Speaker 1: that I think you want to keep your eye on 484 00:26:27,720 --> 00:26:32,119 Speaker 1: really carefully as inflation expectations, because I think we've gotten 485 00:26:32,119 --> 00:26:35,400 Speaker 1: accustomed to this notion that, um, any burst in inflation 486 00:26:35,480 --> 00:26:38,359 Speaker 1: expectations are very short lived, kind of like the value story, 487 00:26:38,680 --> 00:26:40,600 Speaker 1: any burst in value of performance has got to be 488 00:26:40,640 --> 00:26:43,200 Speaker 1: shortlived because it hasn't happened, and they have not endured 489 00:26:43,280 --> 00:26:46,240 Speaker 1: over time. But we've gotten a number of new inflation 490 00:26:46,280 --> 00:26:49,040 Speaker 1: prints over the course of the last six weeks, six 491 00:26:49,880 --> 00:26:52,480 Speaker 1: six to eight weeks that have suggested that this inflation 492 00:26:52,560 --> 00:26:56,840 Speaker 1: may endure. We're starting to see signs in wages that 493 00:26:56,960 --> 00:27:02,119 Speaker 1: suggests the inflation um conditions may endure, and a wage 494 00:27:02,119 --> 00:27:08,080 Speaker 1: price spiral starts with consumers saying I think inflation is 495 00:27:08,080 --> 00:27:09,880 Speaker 1: going to be higher for a longer period of time, 496 00:27:09,920 --> 00:27:13,240 Speaker 1: going to their employer and demanding higher wages, and then 497 00:27:13,280 --> 00:27:16,200 Speaker 1: you get a spiral, right, and then inflation stays stronger, 498 00:27:16,640 --> 00:27:19,840 Speaker 1: and it just reads to me, the economic landscape reads 499 00:27:19,840 --> 00:27:21,439 Speaker 1: to me right now that we may be at that 500 00:27:21,520 --> 00:27:23,440 Speaker 1: turning point. So I think you want to watch inflation 501 00:27:23,480 --> 00:27:28,960 Speaker 1: and expectations really, really carefully. In the short run, everything 502 00:27:29,040 --> 00:27:33,040 Speaker 1: is going to revolve around peak growth. We've got peak 503 00:27:33,080 --> 00:27:36,480 Speaker 1: growth and inflation. In short term, peak growth and inflation, 504 00:27:36,680 --> 00:27:41,480 Speaker 1: peak I s M surveys, peak earnings growth. It just 505 00:27:41,600 --> 00:27:47,600 Speaker 1: peak everything this summer, and the sequence of momentum in 506 00:27:47,600 --> 00:27:51,400 Speaker 1: in growth does matter for investment outcomes. I think it's 507 00:27:51,400 --> 00:27:54,280 Speaker 1: the underappreciated story of what happened in the last six weeks, 508 00:27:55,200 --> 00:27:57,360 Speaker 1: we've got peak everything. Where do we go from here? 509 00:27:57,400 --> 00:27:59,400 Speaker 1: We've got to absorb the idea that we're no longer 510 00:27:59,440 --> 00:28:03,000 Speaker 1: going to see that persistent upward momentum in every indicator 511 00:28:03,040 --> 00:28:06,160 Speaker 1: that we follow. So that's another thing that I'm watching, 512 00:28:06,520 --> 00:28:08,960 Speaker 1: um um. And back to the bond thing, which is 513 00:28:09,240 --> 00:28:11,919 Speaker 1: the connection there. When you talked to earlier about yields 514 00:28:11,920 --> 00:28:14,600 Speaker 1: and stock prices, I want to just invert that and 515 00:28:14,640 --> 00:28:16,359 Speaker 1: say that what you were saying is that bonds and 516 00:28:16,400 --> 00:28:19,760 Speaker 1: stocks moved together lately. Yeah. Right, So if you have 517 00:28:19,800 --> 00:28:23,560 Speaker 1: a sixty forty portfolio, which a lot of people do, Um, 518 00:28:23,600 --> 00:28:25,680 Speaker 1: what are you supposed to do with that? Well, it's 519 00:28:25,720 --> 00:28:28,760 Speaker 1: more they both go down together. Well, the yield rises 520 00:28:28,760 --> 00:28:31,840 Speaker 1: when stock prices rise, so bonds sell off when stock 521 00:28:31,880 --> 00:28:35,800 Speaker 1: prices are rising. So that's typically right, that's what's happening now. Yes, 522 00:28:36,640 --> 00:28:38,880 Speaker 1: over the past ten years, they they sometimes will start 523 00:28:38,920 --> 00:28:42,160 Speaker 1: to move in tandem. Everybody just sells everything. That's what 524 00:28:42,240 --> 00:28:46,280 Speaker 1: happened in March and crashes. What often happens is the 525 00:28:46,320 --> 00:28:50,400 Speaker 1: bond market actually just absolutely rallies to the end of 526 00:28:50,440 --> 00:28:54,360 Speaker 1: the earth and the stock market crashes. Um. You know, 527 00:28:54,400 --> 00:28:57,000 Speaker 1: the portfolio and part has worked as well as it 528 00:28:57,080 --> 00:29:01,680 Speaker 1: has because of this relationships occurred over the last twenty years. 529 00:29:01,680 --> 00:29:03,000 Speaker 1: There are a lot of people, you know, you talk 530 00:29:03,040 --> 00:29:05,960 Speaker 1: about broader diversification, there are a lot of people really 531 00:29:05,960 --> 00:29:08,240 Speaker 1: struggling with if I move into an environment in which 532 00:29:08,240 --> 00:29:10,480 Speaker 1: stocks and bonds are no longer correlated to degree that 533 00:29:10,520 --> 00:29:13,360 Speaker 1: they have been in the past, and inflation is a 534 00:29:13,440 --> 00:29:16,680 Speaker 1: very different concern, how do I structure my portfolio. I 535 00:29:16,680 --> 00:29:18,480 Speaker 1: think this is one of the reasons, one of the 536 00:29:18,480 --> 00:29:22,120 Speaker 1: other underappreciated reasons why people are pushing into crypto. It's 537 00:29:22,160 --> 00:29:25,640 Speaker 1: an alternative asset. People are taking from their bond allocation 538 00:29:26,320 --> 00:29:29,360 Speaker 1: and putting it into alternatives of any description, crypto being 539 00:29:29,400 --> 00:29:33,360 Speaker 1: part of them, but private markets being the biggest chunk 540 00:29:34,160 --> 00:29:38,040 Speaker 1: where they're saying, look, I can't tolerate an environment where 541 00:29:38,840 --> 00:29:43,000 Speaker 1: the bond market in the stock market aren't correlated consistently 542 00:29:43,080 --> 00:29:45,840 Speaker 1: over time in my portfolio. What do I do in 543 00:29:45,880 --> 00:29:48,720 Speaker 1: that scenario? And it's one of the most critical questions 544 00:29:48,760 --> 00:29:52,000 Speaker 1: for a longer term asset owner allocator In my mind, 545 00:29:53,160 --> 00:29:55,280 Speaker 1: I have one that just is a little off topic, 546 00:29:55,320 --> 00:29:58,160 Speaker 1: but it's I'm related, it's on topic, but I've been 547 00:29:58,160 --> 00:30:01,120 Speaker 1: doing a lot of research into Jack Bogel, the Vanguard founder, 548 00:30:01,120 --> 00:30:03,760 Speaker 1: for a book project, and in many of his books 549 00:30:03,800 --> 00:30:07,720 Speaker 1: he talks about where returns come from for stocks um 550 00:30:07,800 --> 00:30:09,080 Speaker 1: and I think it's a great way to sell an 551 00:30:09,080 --> 00:30:11,280 Speaker 1: index fund, because if you buy an index fund, you're 552 00:30:11,320 --> 00:30:13,480 Speaker 1: sort of buying the internal rate rate of return of 553 00:30:13,520 --> 00:30:16,880 Speaker 1: the whole Enchilada. It's not as average or basic as 554 00:30:16,880 --> 00:30:20,280 Speaker 1: it seems. You're actually writing capitalism's coattails. What do you get? 555 00:30:20,480 --> 00:30:24,000 Speaker 1: He says, there's two things, earnings, growth and dividends. That's 556 00:30:24,040 --> 00:30:26,680 Speaker 1: really it. I mean, that's what you get in return. 557 00:30:26,800 --> 00:30:28,680 Speaker 1: Then there's this third element that's a little bit of 558 00:30:28,720 --> 00:30:32,560 Speaker 1: a devil, which is speculative return. That is where pees 559 00:30:32,640 --> 00:30:35,160 Speaker 1: go up really high, and that's where people lose their 560 00:30:35,160 --> 00:30:39,280 Speaker 1: minds behaviorally. And I just was in his book and 561 00:30:39,440 --> 00:30:41,520 Speaker 1: when I interviewed him last about five years ago, he said, 562 00:30:41,800 --> 00:30:45,400 Speaker 1: according to my calculations, those two things earning growths and 563 00:30:45,440 --> 00:30:48,400 Speaker 1: dividend dividends, we're only going to get four to six 564 00:30:48,440 --> 00:30:51,160 Speaker 1: percent from the stock market over the next decade. Well 565 00:30:51,200 --> 00:30:54,200 Speaker 1: it's been like triple that. So are we on living 566 00:30:54,200 --> 00:30:56,680 Speaker 1: on borrowed time? Is there too much speculative return? I mean, 567 00:30:56,720 --> 00:30:59,000 Speaker 1: how much do we have to give give back at 568 00:30:59,040 --> 00:31:03,880 Speaker 1: some point to be back on that math. Yeah, So 569 00:31:04,000 --> 00:31:05,560 Speaker 1: I think that there's a lot there's a lot of 570 00:31:05,640 --> 00:31:10,480 Speaker 1: nuance around this, right, because it's really free cash flow. 571 00:31:10,480 --> 00:31:12,880 Speaker 1: It's really cash flow that you're talking about, because cash 572 00:31:12,920 --> 00:31:14,959 Speaker 1: flow drives both the earnings growth in the dividend. If 573 00:31:14,960 --> 00:31:18,360 Speaker 1: the company is acceller, is it creating positive long term 574 00:31:18,400 --> 00:31:20,240 Speaker 1: cash flow. That's what's going to drive the both of 575 00:31:20,280 --> 00:31:24,480 Speaker 1: those factors and drive the price. And cash flows have 576 00:31:24,680 --> 00:31:28,880 Speaker 1: been relatively low, but you get an artificial inflation in 577 00:31:29,080 --> 00:31:32,080 Speaker 1: earnings growth even if cash flow is low. If interest 578 00:31:32,160 --> 00:31:35,640 Speaker 1: rates are low and tax rates are low, and that's 579 00:31:35,680 --> 00:31:39,760 Speaker 1: the environment that has cultivated a much stronger stock market return. 580 00:31:39,840 --> 00:31:42,560 Speaker 1: In my mind, then you would have had just given 581 00:31:42,680 --> 00:31:46,120 Speaker 1: if you were just looking at cash flow growth. You also, 582 00:31:46,200 --> 00:31:47,880 Speaker 1: as a result of the fact that you have those 583 00:31:47,880 --> 00:31:50,440 Speaker 1: low interest rates, you've had an inordinate period of time 584 00:31:50,440 --> 00:31:54,800 Speaker 1: where buy backs have dominated, and buy backs change the 585 00:31:54,840 --> 00:31:58,080 Speaker 1: EPs calculation, so you don't have core earnings. But if 586 00:31:58,120 --> 00:32:00,600 Speaker 1: you look at EPs that the company looks quite different 587 00:32:00,600 --> 00:32:03,560 Speaker 1: because your share account is being reduced. So there are 588 00:32:03,560 --> 00:32:05,440 Speaker 1: a lot of there are a lot of nuances around this. 589 00:32:05,640 --> 00:32:08,240 Speaker 1: I do think ultimately that you derive the value of 590 00:32:08,240 --> 00:32:10,640 Speaker 1: a share price via the cash flows of the company. 591 00:32:10,680 --> 00:32:13,760 Speaker 1: I totally agree with that, but I think you do 592 00:32:13,800 --> 00:32:15,840 Speaker 1: need to discount those cash flows at a certain interest 593 00:32:15,960 --> 00:32:19,840 Speaker 1: rate in order to get the the actual value um 594 00:32:19,880 --> 00:32:22,040 Speaker 1: And I also think you want to pay attention though, 595 00:32:22,080 --> 00:32:25,240 Speaker 1: because if we go into an environment where interest rates 596 00:32:25,240 --> 00:32:28,560 Speaker 1: are rising over on trend and taxes are also increasing 597 00:32:29,160 --> 00:32:32,040 Speaker 1: on trend, it creates a very different scenario for bottom 598 00:32:32,040 --> 00:32:34,560 Speaker 1: line earnings then we've had in a long period of time. 599 00:32:34,600 --> 00:32:36,600 Speaker 1: But maybe we can have faster cash flows to make 600 00:32:36,680 --> 00:32:39,120 Speaker 1: up for that, right, I guess that's the question. And 601 00:32:39,160 --> 00:32:43,840 Speaker 1: that's also where you know the idea that inflation lifts rates, 602 00:32:44,400 --> 00:32:46,520 Speaker 1: which would then you have some of these high flying 603 00:32:46,520 --> 00:32:49,240 Speaker 1: stocks would sell off a little bit. Yes, why ARCS 604 00:32:49,240 --> 00:32:52,600 Speaker 1: tends to be pretty correlated to rates. Lately, ARC has 605 00:32:52,640 --> 00:32:54,680 Speaker 1: been like I don't know, it's like you've got the 606 00:32:54,720 --> 00:32:57,240 Speaker 1: spy than the cues and ARCS really out there in 607 00:32:57,320 --> 00:32:59,440 Speaker 1: terms of being into some of the reverly growthy names. 608 00:33:00,040 --> 00:33:02,160 Speaker 1: And then so there's a lot of people are looking 609 00:33:02,160 --> 00:33:04,680 Speaker 1: at ARC as sort of a being sensitive to to 610 00:33:04,840 --> 00:33:07,160 Speaker 1: rates because they buy a lot of those stocks that 611 00:33:07,280 --> 00:33:10,920 Speaker 1: might not have the cash flow well, and they look 612 00:33:11,000 --> 00:33:13,959 Speaker 1: like they don't have the cash flow necessarily, but they also, 613 00:33:14,600 --> 00:33:19,200 Speaker 1: in an environment where growth is perilously low, look amazingly strong. Right. 614 00:33:19,240 --> 00:33:21,920 Speaker 1: If if you can sort of think about the theory 615 00:33:21,960 --> 00:33:25,560 Speaker 1: of innovative companies, as these are the fastest growing companies 616 00:33:25,560 --> 00:33:27,760 Speaker 1: in the world in an environment where there is no growth, 617 00:33:28,360 --> 00:33:31,200 Speaker 1: they look amazing. Well, what happens in an environment where 618 00:33:31,200 --> 00:33:35,880 Speaker 1: growth is much stronger and more distributed across industries. Suddenly 619 00:33:35,920 --> 00:33:37,800 Speaker 1: maybe that doesn't have quite the panache that it had 620 00:33:37,800 --> 00:33:40,840 Speaker 1: in the past, Right, And I think that that's part 621 00:33:40,880 --> 00:33:43,400 Speaker 1: of the part of the thesis that we have is 622 00:33:44,200 --> 00:33:46,360 Speaker 1: when you're an environment where there is no growth to 623 00:33:46,400 --> 00:33:49,080 Speaker 1: be had, Sure, a lot of these companies look amazing 624 00:33:49,080 --> 00:33:52,440 Speaker 1: because the growth is all concentrated in their in their names, 625 00:33:52,720 --> 00:33:55,720 Speaker 1: and they have all the potential of the future. But 626 00:33:55,800 --> 00:33:58,480 Speaker 1: if the future starts to look a lot brighter and 627 00:33:58,520 --> 00:34:01,200 Speaker 1: a lot of other industries start to participate in that future, 628 00:34:01,280 --> 00:34:03,160 Speaker 1: which has been sort of boxed out of the growth 629 00:34:03,240 --> 00:34:06,240 Speaker 1: environment for so long, all of a sudden, your investment 630 00:34:06,240 --> 00:34:09,520 Speaker 1: opportunities at bronze and you can think about buying an 631 00:34:09,560 --> 00:34:12,320 Speaker 1: industrial company, You can think about buying a consumer company. 632 00:34:12,400 --> 00:34:18,959 Speaker 1: God forbid, you might even you know something else beyond tech. Um. 633 00:34:19,000 --> 00:34:20,319 Speaker 1: I do think they're going to come out with like 634 00:34:20,400 --> 00:34:22,719 Speaker 1: an E t F like stuff you need E t F. 635 00:34:22,800 --> 00:34:24,960 Speaker 1: Like they're going to start to relabel staples and to 636 00:34:25,080 --> 00:34:29,080 Speaker 1: catch your things stuf as T Yeah, I know you want. 637 00:34:29,120 --> 00:34:38,120 Speaker 1: That's for the big one. One of the questions I 638 00:34:38,120 --> 00:34:40,560 Speaker 1: have for you and the way you talk about growth 639 00:34:40,600 --> 00:34:42,880 Speaker 1: and they and the economy and you and I discussed 640 00:34:42,880 --> 00:34:48,440 Speaker 1: this a lot, which is being bullish, being optimistic. You're 641 00:34:48,480 --> 00:34:52,000 Speaker 1: generally gonna get wealthier. That's said as an analyst who's 642 00:34:52,000 --> 00:34:55,560 Speaker 1: looking for readership and to make noise. It's tempting to 643 00:34:55,640 --> 00:34:57,680 Speaker 1: be the bear, to be the top caller, to be 644 00:34:57,760 --> 00:35:02,520 Speaker 1: the big, short, cool guy. Right. You obviously don't do that. 645 00:35:02,600 --> 00:35:04,759 Speaker 1: You tend to generally look at the bright side. You 646 00:35:04,800 --> 00:35:07,359 Speaker 1: find things in the data and if you're following you, 647 00:35:07,360 --> 00:35:09,480 Speaker 1: you've made more money than the person. Because we we 648 00:35:09,520 --> 00:35:12,279 Speaker 1: know there are some who are constantly looking at what's 649 00:35:12,280 --> 00:35:14,960 Speaker 1: going to go wrong, and it looks good, it looks sophisticated, 650 00:35:15,000 --> 00:35:18,960 Speaker 1: looks like you're caring about the about everything. Um, and 651 00:35:19,000 --> 00:35:20,840 Speaker 1: there's no opportunity costs. No one ever goes back to 652 00:35:20,880 --> 00:35:23,360 Speaker 1: the bears and says, oh, you were wrong. I went yeah, 653 00:35:23,400 --> 00:35:25,520 Speaker 1: whereas the bulls, God forbid, the market goes down there, 654 00:35:25,520 --> 00:35:27,840 Speaker 1: Like Gina, you said, it was okay. So can you 655 00:35:27,920 --> 00:35:33,759 Speaker 1: talk about that idea of taking the optimistic road. It's 656 00:35:33,840 --> 00:35:36,759 Speaker 1: very es right. I mean, it may be as a 657 00:35:36,840 --> 00:35:40,719 Speaker 1: function of my age. I don't know, um, but I 658 00:35:41,080 --> 00:35:43,560 Speaker 1: think it's I think it's due to just the popular 659 00:35:43,600 --> 00:35:47,799 Speaker 1: psychology of the last twenty years, particularly in the equity market. 660 00:35:47,880 --> 00:35:51,879 Speaker 1: Since the crash of two thousand, it has been very 661 00:35:51,960 --> 00:35:55,040 Speaker 1: popular to look over your shoulder for that next crash. 662 00:35:55,239 --> 00:35:57,960 Speaker 1: Anytime you can. You know, to the degree that you 663 00:35:58,000 --> 00:36:01,440 Speaker 1: write an article or publish a thought peace on that 664 00:36:01,520 --> 00:36:06,360 Speaker 1: appeals to popular psychology, you're more popular. Unfortunately for me, 665 00:36:06,400 --> 00:36:08,799 Speaker 1: I just don't care if I'm popular. I just want 666 00:36:08,800 --> 00:36:11,719 Speaker 1: to be right. But you know that you could say 667 00:36:11,719 --> 00:36:14,719 Speaker 1: the opposite was true in the nineteen nineties. I would 668 00:36:14,800 --> 00:36:18,400 Speaker 1: imagine if you were writing articles of optimism, you were, 669 00:36:19,040 --> 00:36:21,319 Speaker 1: you know, very popular. In the nineteen nineties. It was 670 00:36:21,320 --> 00:36:24,920 Speaker 1: a very strong bull market condition where everybody had optimism 671 00:36:24,960 --> 00:36:28,040 Speaker 1: about the future of equities. It's just very different. It 672 00:36:28,120 --> 00:36:31,080 Speaker 1: makes me feel great about the durability of the longer 673 00:36:31,200 --> 00:36:33,480 Speaker 1: term bull market. You know, as long as it's very 674 00:36:33,560 --> 00:36:38,720 Speaker 1: unpopular to be positive, it's probably the right call. Um. 675 00:36:38,960 --> 00:36:43,480 Speaker 1: But in words, not everybody is so enthusiastic where you 676 00:36:43,520 --> 00:36:45,520 Speaker 1: feel like, wait, everybody is losing their mind here in 677 00:36:45,560 --> 00:36:48,840 Speaker 1: a positive way, exactly exactly. As long as we're always 678 00:36:48,840 --> 00:36:51,040 Speaker 1: looking over our shoulder for that next big risk, then 679 00:36:51,080 --> 00:36:54,400 Speaker 1: you probably have a much more rational market in general. 680 00:36:54,960 --> 00:36:58,000 Speaker 1: Is it's very healthy to constantly be looking for risk? 681 00:36:59,120 --> 00:37:03,560 Speaker 1: In general? It's it's tough to be an optimist in 682 00:37:03,560 --> 00:37:08,759 Speaker 1: that crowd and get attention. Nonetheless, Nonetheless, it's it's been 683 00:37:08,800 --> 00:37:12,000 Speaker 1: the right call, So I'll stick with that. Okay, I've 684 00:37:12,000 --> 00:37:14,960 Speaker 1: got a final question, which is it's mid year review 685 00:37:15,040 --> 00:37:19,319 Speaker 1: season here at Bloomberg House. Is there anything that that um, 686 00:37:19,560 --> 00:37:22,359 Speaker 1: Eric needs to work on? Oh my gosh, I don't 687 00:37:22,360 --> 00:37:27,239 Speaker 1: think I can possibly air that. Eric's been great. Do 688 00:37:27,239 --> 00:37:29,239 Speaker 1: you know I got one other one for you? And 689 00:37:29,280 --> 00:37:31,680 Speaker 1: I think I've asked you before. Oh, no, favorite et 690 00:37:31,800 --> 00:37:37,480 Speaker 1: F ticker? Oh, I don't know that I have one. 691 00:37:37,520 --> 00:37:39,800 Speaker 1: But I really like M TOM because I'm a technician. 692 00:37:40,360 --> 00:37:45,040 Speaker 1: So the only reason I like it is, yeah, um, 693 00:37:45,080 --> 00:37:47,200 Speaker 1: the only reason I like it is is because I 694 00:37:47,239 --> 00:37:50,640 Speaker 1: do believe the momentum is, over the long term, a 695 00:37:50,760 --> 00:37:54,960 Speaker 1: very very viable equity strategy. So I would just buy 696 00:37:55,080 --> 00:37:59,560 Speaker 1: momentum if I had to buy any individual factors. Good 697 00:37:59,640 --> 00:38:02,680 Speaker 1: Nobody ever said that's a good one. Yeah, yeah, sorry, 698 00:38:03,080 --> 00:38:05,839 Speaker 1: that's not that exciting. Geena Martin Adams, thanks so much 699 00:38:05,880 --> 00:38:08,239 Speaker 1: for joining us on Trillions. Thank you for having me, 700 00:38:13,160 --> 00:38:15,759 Speaker 1: Thanks for listening to Trillions until next time. You can 701 00:38:15,800 --> 00:38:20,360 Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify, 702 00:38:20,840 --> 00:38:23,120 Speaker 1: and wherever else you like to listen. We'd love to 703 00:38:23,120 --> 00:38:26,040 Speaker 1: hear from you. We're on Twitter, I'm at Joel Webber Show. 704 00:38:26,320 --> 00:38:29,880 Speaker 1: He's at Eric Falcuna's. This episode of Trillions was produced 705 00:38:29,880 --> 00:38:46,719 Speaker 1: by Magnus Hendrickson. Princesca Levi is the head of Bloomberg Podcast. Bye.