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Markets And The Fed In 2022 · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Let's check in on
• 0:22
  Speaker 1: these markets. Rebecca Felt and senior market strategists at Riverfront
• 0:25
  Speaker 1: Investment Group located in beautiful Richmond, Virginia. Rebecca, thanks so
• 0:29
  Speaker 1: much for joining us here. You are a fellow University
• 0:32
  Speaker 1: of Richmond alumni. You know what the mascot is mat
• 0:35
  Speaker 1: at the University of Richmond. Wait, I thought you were
• 0:37
  Speaker 1: a duke guy graduate school. I see, Okay, so undergrad
• 0:40
  Speaker 1: the mascot is um General Lee Spiders. Oh yes, you
• 0:47
  Speaker 1: never would have guessed that, but Rebecca knows that. Rebecca,
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  Speaker 1: thanks so much for joining us here. What are you
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  Speaker 1: doing in a market where we've got interest rates rising,
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  Speaker 1: we've got growth slowing? How do you have the courage
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  Speaker 1: to be in this market? Thank you so much for
• 1:01
  Speaker 1: having me. Well for self. You know, one of the
• 1:03
  Speaker 1: things we rely on as our process and our tactical
• 1:05
  Speaker 1: indicators are still suggesting it's appropriate to be overweight stocks UM,
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  Speaker 1: and we are with a preference for US equity. Now,
• 1:12
  Speaker 1: I'll say that and also point out that we have
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  Speaker 1: taken some risk off the table um in the last
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  Speaker 1: month or so. We've we've bumped up our cash just
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  Speaker 1: a little bit UM, but that's really for maybe a
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  Speaker 1: buying opportunity later, not because we bearish. Yeah. We heard
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  Speaker 1: yesterday we're talking to Phil Orlando from Federate Hermes and
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  Speaker 1: he was saying, uh, he thinks the markets rallying to
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  Speaker 1: undred by year end, but this first half is going
• 1:36
  Speaker 1: to be choppy and almost wanting to preserve capital. I
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  Speaker 1: think he said, you know for now, Um, you sound
• 1:43
  Speaker 1: a little bit more sanguine about the risks the headwinds
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  Speaker 1: UM to to face US stock investors for for this
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  Speaker 1: part of the year. Well, you know, when we put
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  Speaker 1: our outlook out in at the end of December beginning
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  Speaker 1: of January, the theme of it was the return of
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  Speaker 1: volatility in two So of course that doesn't mean it's
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  Speaker 1: going to be pleasant, um, but we think, you know,
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  Speaker 1: selection is going to be t having um, you know,
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  Speaker 1: some growth, some value and against some cash for ballost
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  Speaker 1: if you will, against these types of periods, and we
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  Speaker 1: think that you can navigate through, but we do also
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  Speaker 1: agree that the volatility will likely continue through through the
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  Speaker 1: first half of the year. And Rebecca, we're kind of
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  Speaker 1: in getting into the meat here of earning season. What
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  Speaker 1: do you need to see from corporate earnings here as
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  Speaker 1: it relates to maybe valuation here? Obviously some people have
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  Speaker 1: some valuation concerns. What do you need to see from
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  Speaker 1: earnings to kind of address that issue? Well, when you
• 2:39
  Speaker 1: think about where we were in terms of growth in
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  Speaker 1: twenty one right there now forecasting full year one is
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  Speaker 1: going to come in north oft and we know that
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  Speaker 1: that was you know, coming out of the depths, and
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  Speaker 1: then now you're looking at two where you're seeing a
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  Speaker 1: deceleration of growth in that eight ten percent range. That's consensus,
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  Speaker 1: i think for the calendar year that are in. But
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  Speaker 1: that has been well known for six months or so,
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  Speaker 1: right so that that forward growth expectation has been there,
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  Speaker 1: and we've also seen a couple of multiple points come
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  Speaker 1: out of the SMP five hundred as we have navigated
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  Speaker 1: through this year, so we're back to what we would
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  Speaker 1: consider a more normal type of earnings growth trajectory, and
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  Speaker 1: we think that the current valuations can bear that out,
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  Speaker 1: particularly when you look at UH profit margins being so strong,
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  Speaker 1: cash levels being so high, and the growth prospects still
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  Speaker 1: very good for the US in terms of yields. Right
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  Speaker 1: now we're headed towards two. It seems quickly. UM. How
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  Speaker 1: much does that bother you, uh in terms of your
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  Speaker 1: equity investments and at what point would it you know,
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  Speaker 1: what level do you think you'd have to make some
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  Speaker 1: changes to your strategy? Well, definitely UH north of two,
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  Speaker 1: most likely before we started bumping up our our fixed
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  Speaker 1: income UM. I asked that question a lot of our
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  Speaker 1: fixed income folks, and I think that they serve the
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  Speaker 1: right to to to hold off on giving a finite number.
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  Speaker 1: But when you think about the technology space, we are
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  Speaker 1: still neutral to slightly over light there. But we are
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  Speaker 1: still leaning into those software companies because we think it's
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  Speaker 1: worth it to pay up for names that have consistency
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  Speaker 1: potential as it relates to earnings and revenues UM. And
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  Speaker 1: we do expect that they're going to be a little
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  Speaker 1: choppy in here as folks digest the fact that rates
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  Speaker 1: are going higher, But we still think growth will win out,
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  Speaker 1: and so we're content to stick with the space. I'm
• 4:28
  Speaker 1: looking at w t I crude oil. It's off about
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  Speaker 1: two percent today but still just below nine per barrel,
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  Speaker 1: and it's obviously been a good harbinger for energy stocks
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  Speaker 1: actually getting a little bit more love in the marketplace.
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  Speaker 1: How do you think about energy? Right here? Is are
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  Speaker 1: more room to go? Well, we had come into this
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  Speaker 1: year slightly underweight energy because we did not expect oil
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  Speaker 1: to go as high as it has gone. Um. Obviously
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  Speaker 1: for the foreseeable future, though, we expect prices to stay high,
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  Speaker 1: particularly with the tensions going on on the you crane border. Um.
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  Speaker 1: So we have neutralized that position and we're sitting tight
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  Speaker 1: with that at this moment. All right. So the geopolitical
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  Speaker 1: issues are always just difficult to get right. Let me
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  Speaker 1: ask you, just with about thirty seconds left, what you
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  Speaker 1: think about crazy things like crypto? Is it too crazy? Well?
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  Speaker 1: I don't um have really a good answer for you. There.
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  Speaker 1: It is a space that we watch, obviously because companies
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  Speaker 1: that we own have exposures there um that we do
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  Speaker 1: not outright invest in it. It's this time, all right, Rebecca,
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  Speaker 1: crazy and it's still too crazy. It's still crazy for
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  Speaker 1: a lot of people. For main Street, yes, Richmond, and
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  Speaker 1: for maybe even Jamie diamond In. Yeah, but I think
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  Speaker 1: like Rebecca, you know, they she has she's invested in
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  Speaker 1: companies that are connected. He's willing to work with clients
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  Speaker 1: that are connected. He thinks. Let's check in with Darren Schurvi.
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  Speaker 1: It's portfolio manager for jacob Asset Management. Darren, what are
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  Speaker 1: you doing with this market here? We've seen I guess
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  Speaker 1: volatility has been kind of the name of the game
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  Speaker 1: here so far. Ino, how are you thinking about this market? Well,
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  Speaker 1: it's absolutely uh remains one of the craziest market environments
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  Speaker 1: I've seen. But that's pretty much been the case for uh,
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  Speaker 1: you know, not just two but uh certainly I would
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  Speaker 1: say for the last twelve twenty four months. Frankly, so
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  Speaker 1: this is really not much different. I mean, if if
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  Speaker 1: you look at the area where we generally focus on
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  Speaker 1: a jacobeth In Management, which is the smaller cap portion
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  Speaker 1: of the marketplace, I mean, we've been kind of in
• 6:46
  Speaker 1: a stealth are market for twelve months. So again I'm
• 6:50
  Speaker 1: you know, generally speaking, I'm looking at this this opportunity
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  Speaker 1: to try and find values that are out there in
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  Speaker 1: the marketplace. So where are you finding them? Oh, in
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  Speaker 1: a lot of different places obviously, you know. I mean
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  Speaker 1: part of the uh you know question is trying to
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  Speaker 1: determine which companies are going to do well when we
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  Speaker 1: come out of this uh, you know, difficult COVID pandemic environment,
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  Speaker 1: which ones are going to be able to handle inflationary
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  Speaker 1: environments and uh So I mean one example, for for instance,
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  Speaker 1: is in cryptocurrency, which obviously, UH is a area that
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  Speaker 1: that we're pretty intensely interested in. Uh. You know, in
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  Speaker 1: a lot of ways, it parallels what we saw UM
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  Speaker 1: as a technology focused investor way back when in the
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  Speaker 1: dot com bubble. A lot of interesting opportunities, but a
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  Speaker 1: lot of perils. So you know, one of the UH
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  Speaker 1: stocks that we like here is is a cryptocurrency broker
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  Speaker 1: called Voyager Digital. Uh. That is one area that we like.
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  Speaker 1: We have investments in silver Gate and Galaxy Digital as
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  Speaker 1: well in that space. So, and I know, I know
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  Speaker 1: you were back at the dot com era here, boy,
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  Speaker 1: that didn't end well for a lot of people you
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  Speaker 1: think the risk was good for But Darren, you were
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  Speaker 1: at market Watch at the time, right, Yeah, So I've
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  Speaker 1: been uh, originally a journalist and and left to join
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  Speaker 1: the asset management field in actually the peak of the
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  Speaker 1: dot com Yeah, in hindsight is a pretty good conjuring indicator.
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  Speaker 1: But you know, it's all about your timelines. I mean,
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  Speaker 1: you'd say it didn't end well. And yet if you
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  Speaker 1: look at the you know, ten most valuable companies in
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  Speaker 1: the world, they're all basically Internet base. It was an
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  Speaker 1: issue of timing more so than opportunity, and and so
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  Speaker 1: you know that's part of the game in the in
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  Speaker 1: the market and uh so generally speaking, you know, when
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  Speaker 1: I was looking at this marketplace and all of the
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  Speaker 1: crazy speculation that we saw with the meme stocks and
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  Speaker 1: the cryptos and and f t s and and just
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  Speaker 1: had trouble finding good opportunities in that type of marketplace.
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  Speaker 1: So when I see this uh kind of come down, Uh,
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  Speaker 1: you know, that gets me more excited. It opens up opportunities.
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  Speaker 1: A great example of that is with SPACs. I mean,
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  Speaker 1: you know, that was one of the the biggest indicators
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  Speaker 1: that things were just getting entirely uh you know, too
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  Speaker 1: speculative and goofy and some level, and and so many
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  Speaker 1: of those SPACs are now totally broken with with evaluations
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  Speaker 1: well under the price they became public at. You know,
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  Speaker 1: are we there yet at the bottom. Probably not. You know,
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  Speaker 1: a lot of these companies, just like we saw in
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  Speaker 1: the in the dot com bubble, will will fail. But
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  Speaker 1: there are some interesting companies, There are some interesting technologies
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  Speaker 1: out there, and I think it is going to be
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  Speaker 1: on us to kind of pick through some of the
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  Speaker 1: carcasses that arise and and and realize where there's opportunity
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  Speaker 1: and when there was just hype. All right, Darren, great
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  Speaker 1: to get some time with you, and I hope to
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  Speaker 1: talk to you more again in the future. I'm intensely
• 9:56
  Speaker 1: focused on crypto as well. So um, I'm glad we
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  Speaker 1: had you on. And uh, Darren turvit's their portfolio manager
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  Speaker 1: from Jacob Asset Management talking to us about what he's
• 10:06
  Speaker 1: looking for in terms of opportunity in terms of crypto.
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  Speaker 1: You know, it's been an incredible run over the past
• 10:12
  Speaker 1: um few sessions for bitcoin. We're trading it just over
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  Speaker 1: forty forty three thousand, I should say right now, so uh,
• 10:19
  Speaker 1: forty three thousand, four hundred dollars basically. But you know,
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  Speaker 1: it was only two weeks ago that we were down
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  Speaker 1: at thirty six and um, we had flirted. People thought
• 10:30
  Speaker 1: we were going down to thirty um, but we have
• 10:32
  Speaker 1: gone the other way and it's interesting to watch bitcoin
• 10:34
  Speaker 1: now get some get some real power. Let's check in
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  Speaker 1: with our next. Katerina Simonetti, Senior vice president, Private Wealth
• 10:44
  Speaker 1: Advisor at Morgan Stanley. Katerina thinks, so much for joining
• 10:48
  Speaker 1: us here. I kind of feel like, you know, I
• 10:50
  Speaker 1: got a lot of bricks in my wall of worry here,
• 10:53
  Speaker 1: not the least of which is inflation. But I need
• 10:57
  Speaker 1: to be in the market though I just stayed defensive.
• 11:00
  Speaker 1: What are you telling your clients, Matt, You're right, I
• 11:03
  Speaker 1: mean the certainly has been a bumpy right, and it's
• 11:07
  Speaker 1: nice to see some green on the screen for sure. Uh.
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  Speaker 1: And the uniqueness of the situation is that we not
• 11:13
  Speaker 1: only have inflation, but we also have this really low
• 11:16
  Speaker 1: rate environment and with no rates are going up. But
• 11:19
  Speaker 1: this combination of the low rate environment and inflation that
• 11:22
  Speaker 1: is higher than expected, UH, is a definite concerns for investors.
• 11:28
  Speaker 1: And we see it with consumer spending, with the consumers
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  Speaker 1: seeing extremely relactant suspense and kind of just start looking
• 11:33
  Speaker 1: at the situation and perhaps inflation is not going to
• 11:37
  Speaker 1: stay at the current high levels that we're seeing it.
• 11:40
  Speaker 1: Perhaps it's going to they're going to be some type
• 11:42
  Speaker 1: of level of normalization. But what it means to investors
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  Speaker 1: is that real returns, inflation adjusted returns, are more important
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  Speaker 1: than ever and we have to very carefully analyze the
• 11:54
  Speaker 1: investment portfolios through the prison of are they producing enough
• 11:58
  Speaker 1: income to at the rear least maintained the buying power
• 12:02
  Speaker 1: of our portfolios and does everything that we have in
• 12:05
  Speaker 1: our portfolios makes sense from the perspective of real returns?
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  Speaker 1: And that's what inflation, That's what investors are asking us about.
• 12:13
  Speaker 1: And these are the conversations that we're having over and over,
• 12:16
  Speaker 1: you know, looking at everything through the perspective of being
• 12:20
  Speaker 1: prepared for being at the higher rate um inflation environment
• 12:24
  Speaker 1: for a quite some time. Yeah, it's the rates that
• 12:26
  Speaker 1: are the concern. Right, how far do you expect the
• 12:30
  Speaker 1: FED to go? How far do you set a ten
• 12:32
  Speaker 1: year ago? Well said has done you know, very good
• 12:37
  Speaker 1: job setting expectations and their decisions are very much economically driven,
• 12:42
  Speaker 1: not market driven, and economy has remained strong. I mean,
• 12:45
  Speaker 1: there are challenges without shadow of a doubt, you know.
• 12:48
  Speaker 1: So we think that they're going to be a number
• 12:50
  Speaker 1: of rate hikes, you know, probably the quarter point at
• 12:52
  Speaker 1: the time. UM, it's hard to know exactly how far
• 12:55
  Speaker 1: the rates are going to get, you know, but the
• 12:58
  Speaker 1: concern is really for the existing portfolios and existing positioning
• 13:03
  Speaker 1: UM and the quality right now of fixing com portfolios.
• 13:07
  Speaker 1: You know, it's important more than ever. Um. Now, this
• 13:09
  Speaker 1: is not an unprecedented times you know, the environment of
• 13:13
  Speaker 1: raising races a little bit not writing for investors, but
• 13:16
  Speaker 1: you know, we get through it, you know, over and over.
• 13:19
  Speaker 1: But it is unprecedented when we're dealing with hiking market volatility,
• 13:24
  Speaker 1: inflution and the environment would fed as a raising rate
• 13:27
  Speaker 1: all at the same time. So it's going to be
• 13:29
  Speaker 1: a bumpy, right, heightened volatility, and we should mentally prepare
• 13:34
  Speaker 1: for it. Katarina, When your clients call up and ask
• 13:38
  Speaker 1: about crypto broadly defined or bitcoin, how do you kind
• 13:42
  Speaker 1: of have that conversation, Well, you know, it's it's there.
• 13:47
  Speaker 1: There's a lot of uncertainty in that effort pass and
• 13:50
  Speaker 1: you know, we see the volatility that is at the
• 13:52
  Speaker 1: highest level you know possible. So we really are very
• 13:56
  Speaker 1: thankful about having those discussions. You know, from the perspective
• 13:59
  Speaker 1: of you know, we want to make sure that that
• 14:02
  Speaker 1: investors themselves do a lot of homework trying to understand
• 14:05
  Speaker 1: what the assets class is all about and what will
• 14:08
  Speaker 1: in place, you know, in their investment portfolios. You know,
• 14:11
  Speaker 1: so we we just you know, our job as advisors,
• 14:15
  Speaker 1: you know, EA is to set expectations and prepare the
• 14:18
  Speaker 1: general investment public for a much much higher level of
• 14:21
  Speaker 1: volatility and asset class versus traditional stock market investments and uh,
• 14:27
  Speaker 1: you know, more expected volatilities. We've seen some reasonable volatility
• 14:30
  Speaker 1: and commodities other commodities, right because a lot of people
• 14:33
  Speaker 1: think of cryptos just as digital commodities. What do you
• 14:37
  Speaker 1: think about the the o G commodities though? I mean,
• 14:41
  Speaker 1: you know, the oils, the metals, the eggs. Is that important? Well,
• 14:47
  Speaker 1: it's bring you bring me to the original question about inflation.
• 14:51
  Speaker 1: So commodities traditionally are viewed as one of the inflation hedges.
• 14:56
  Speaker 1: And you know what we're doing right now is we're
• 14:58
  Speaker 1: putting making sure that an investors do have a diversified portfolio.
• 15:03
  Speaker 1: You know, all the sectors that are you know, historically
• 15:06
  Speaker 1: known as inflation hedges, and commodities absolutely play a role
• 15:11
  Speaker 1: there we can deny that. You know, there has been
• 15:13
  Speaker 1: a serious subject in the price of oil, you know.
• 15:15
  Speaker 1: But the other area that that works really well in
• 15:18
  Speaker 1: this environment is real estate because as we look at
• 15:21
  Speaker 1: the inflation heades, you know, would ideally would we try
• 15:24
  Speaker 1: to combine is not only the appreciation potential and maintaining
• 15:29
  Speaker 1: the ability of these sectors to maintain the purchasing value
• 15:32
  Speaker 1: of the investors, but also looking at asset classes that
• 15:35
  Speaker 1: produced currents become and this is where you know, industrials
• 15:38
  Speaker 1: and reads, you know, really common to play. But historically,
• 15:41
  Speaker 1: you know, coming back to your question about commodity, commodities
• 15:44
  Speaker 1: can be used very effectively as inflation hedges. All right, Katerina,
• 15:48
  Speaker 1: thank you so much for joining us. Always appreciate getting
• 15:51
  Speaker 1: your thoughts and perspective. Katerina Semineity. She's a senior vice
• 15:54
  Speaker 1: president and a private wealth adviser for Morgan Stanley. And
• 15:59
  Speaker 1: you know, it's just math. We've seen the commodities inflation.
• 16:03
  Speaker 1: You know, everybody that comes on and there are a
• 16:05
  Speaker 1: lot smarter than me, say, inflation is going to come
• 16:08
  Speaker 1: down markedly throughout this year and maybe it's even peaky
• 16:11
  Speaker 1: now or perhaps next month. Boy I guess I haven't
• 16:16
  Speaker 1: seen it yet. I mean I also hear that from UM.
• 16:21
  Speaker 1: Most of the people who come on, all of whom
• 16:24
  Speaker 1: are also smarter than I. UM. I will say, and
• 16:28
  Speaker 1: again I'm going to revert to N I Gilbert. I
• 16:30
  Speaker 1: highly recommend people type NI space Gilbert on the terminal.
• 16:34
  Speaker 1: I'm doing it as Mark's story number three on on
• 16:39
  Speaker 1: his ticker. There is about a couple of really big
• 16:43
  Speaker 1: names on Wall Street. Nikolai Tangan, who's I guess Global
• 16:46
  Speaker 1: Wall Street right because he runs the Norwegian Wealth Fund,
• 16:48
  Speaker 1: and Blackrock are both saying inflation is here to stay. Yeah,
• 16:53
  Speaker 1: I don't know, but you're right. Most people have said
• 16:55
  Speaker 1: it's going to be tempered in the second half, come
• 16:58
  Speaker 1: back down to earth. So we'll have to see a
• 17:00
  Speaker 1: that's certainly an issue for investors today. David Cats, president
• 17:06
  Speaker 1: and chief investment officer for Matrix Asset Advisors, joins us, David,
• 17:09
  Speaker 1: I love chatting with you. I love to get your
• 17:11
  Speaker 1: thoughts here as we struggle here early in the equity
• 17:15
  Speaker 1: markets a lot of altility, which people warned us about,
• 17:19
  Speaker 1: how do you think about value versus growth here? Given
• 17:23
  Speaker 1: what we've seen so far this year, So we went
• 17:26
  Speaker 1: into the year cautiously optimistic about the market, but a
• 17:30
  Speaker 1: little bit concerned about the growthier areas of the market
• 17:32
  Speaker 1: because we saw a lot of accesses in light of
• 17:35
  Speaker 1: the fact that you had a ten to sell off
• 17:39
  Speaker 1: in that area for the first month of the year.
• 17:41
  Speaker 1: We think it's a more level playing field right now,
• 17:44
  Speaker 1: and we think that you can buy in both areas,
• 17:46
  Speaker 1: both value and growth, but you do have to be
• 17:48
  Speaker 1: a lot more discerning on the growth side. What do
• 17:52
  Speaker 1: you think when you look at what's happening in rates
• 17:54
  Speaker 1: right now? I mean, we're all on kind of two
• 17:56
  Speaker 1: percent watch with a tenure um right now trading at
• 17:59
  Speaker 1: one plus. We have in It's not just the US,
• 18:03
  Speaker 1: right You've got UM, the b o E, and now
• 18:06
  Speaker 1: the ECB on board with kind of a global rate
• 18:09
  Speaker 1: raising uh cycle. So we do think that rates are
• 18:14
  Speaker 1: going to be going up this year. That's you know,
• 18:16
  Speaker 1: locked and load of the fet is going to be
• 18:18
  Speaker 1: raising rates. Whether it's three or four or five times,
• 18:22
  Speaker 1: it's going to be happening. We think inflation is definitely
• 18:25
  Speaker 1: out there. We do believe it's going to start to
• 18:27
  Speaker 1: come down a little bit by the July August time frame,
• 18:31
  Speaker 1: but we think interest rates are going higher, and you
• 18:33
  Speaker 1: want to invest accordingly because it shouldn't be a surprise
• 18:37
  Speaker 1: when the tenure does hit too. It's going to happen
• 18:40
  Speaker 1: small caps. Is it a time for small caps to
• 18:42
  Speaker 1: really shine? Here? David So again, small caps opened the
• 18:47
  Speaker 1: year pretty horribly. They're down about fifteen to so we
• 18:51
  Speaker 1: do think from here, in a better economy and as
• 18:54
  Speaker 1: count COVID takes a back seat eventually that they will
• 18:58
  Speaker 1: come back very sharply. So we like small caps here.
• 19:01
  Speaker 1: We don't traffic as much in individual small stocks. We
• 19:05
  Speaker 1: focus on mid and large. On the small cap side,
• 19:08
  Speaker 1: we like the e t f s like the Russell
• 19:11
  Speaker 1: two thousand or the SMP Small Cap Index. We think
• 19:13
  Speaker 1: is your real good exposure to that area of the market,
• 19:16
  Speaker 1: and we would be buying the step. You know, you've
• 19:18
  Speaker 1: had a very sharp sell off. We think if you
• 19:20
  Speaker 1: have a six or twelve month time arise and there
• 19:22
  Speaker 1: are lots of different places to put money to work,
• 19:24
  Speaker 1: we would not chase the strong days like today, but
• 19:27
  Speaker 1: on the days where the markets off two hundred five
• 19:29
  Speaker 1: hundred points small caps are down, we'd buy small caps
• 19:32
  Speaker 1: and we think there are, you know, lots of places
• 19:34
  Speaker 1: to make money, whether it's small, mid, or large. And
• 19:37
  Speaker 1: what about regionally, I mean, do you focus on only
• 19:40
  Speaker 1: the US? Do you look at what's going on in
• 19:42
  Speaker 1: Europe emerging markets? So our primary expertise is in the US.
• 19:47
  Speaker 1: We do look at the international markets, and we we
• 19:49
  Speaker 1: think after a decade of underperforming that the international markets
• 19:53
  Speaker 1: are also poised to do better. So we like the
• 19:56
  Speaker 1: developed markets this year again, we would do that probably
• 20:00
  Speaker 1: where e t f s or some active managers. We
• 20:02
  Speaker 1: also think the emerging markets are probably one of the
• 20:05
  Speaker 1: better opportunities in the globe. There's a lot more uncertainty there,
• 20:08
  Speaker 1: there's a lot more volatility, but as long as you
• 20:11
  Speaker 1: can put a small percentage there, we think you can
• 20:13
  Speaker 1: buy some e t f s in the emerging market
• 20:16
  Speaker 1: area and you'll be well rewarded. Rewarded on a twelve
• 20:18
  Speaker 1: month basis um. Just to understand that there's a lot
• 20:22
  Speaker 1: more risk associated with it. And in terms of the
• 20:24
  Speaker 1: emerging markets, we think they're about six to twelve months
• 20:27
  Speaker 1: behind the United States in terms of trying to deal
• 20:30
  Speaker 1: with COVID. But we do think you're gonna have a
• 20:32
  Speaker 1: global economic recovery and that helps the emerging markets, all right, David,
• 20:36
  Speaker 1: we have inflation, and one of the discussions that Matt
• 20:39
  Speaker 1: and I continue to have is, you know, we know
• 20:41
  Speaker 1: the feed is retired the term transitory, but a lot
• 20:44
  Speaker 1: of folks that we talked to on this program talk
• 20:46
  Speaker 1: about inflation ebbing materially in the second half of the years.
• 20:51
  Speaker 1: That's something you ascribe to. So the question is what's
• 20:55
  Speaker 1: materially We think that inflation is going to start to
• 20:57
  Speaker 1: move lower, you think we think the comparisons start to
• 21:00
  Speaker 1: get easier by uh June July, August. We think inflation
• 21:04
  Speaker 1: ultimately settles down and like the three and a half
• 21:07
  Speaker 1: to four percent range and then then goes lower from there.
• 21:10
  Speaker 1: But we don't think you're going back to two percent,
• 21:12
  Speaker 1: But we don't think you're going to stay at seven
• 21:14
  Speaker 1: or eight percent. So you do think UM inflation is
• 21:19
  Speaker 1: here to stay UM to a point? What does that
• 21:22
  Speaker 1: mean the Fed has to do to fight it? Well,
• 21:26
  Speaker 1: we think the Fed is correctly raising rates this year,
• 21:29
  Speaker 1: and we think that as the logistics problems from that
• 21:33
  Speaker 1: our COVID related go into the rear view mirror, and
• 21:37
  Speaker 1: as the labor market settled down, UM inflation settles back
• 21:41
  Speaker 1: at the three and a half percent level, and we
• 21:43
  Speaker 1: think if the Fed has raised rates a number of
• 21:45
  Speaker 1: times this year, um, they will have correctly slowed inflation down.
• 21:49
  Speaker 1: And that's a very livable number, we think in terms
• 21:51
  Speaker 1: of the stock market. Uh, inflation under three and a
• 21:55
  Speaker 1: half percent is very good for the long term. When
• 21:58
  Speaker 1: inflation gets above percent on a longer term basis, and
• 22:02
  Speaker 1: we don't think that's going to happen, that typically is
• 22:04
  Speaker 1: a negative for the stock market, So we don't think
• 22:07
  Speaker 1: we're gonna get there. We think we're in a sweet
• 22:09
  Speaker 1: spot of the equity markets where you have a good economy,
• 22:13
  Speaker 1: inflation should be manageable, interest rates are still relatively low,
• 22:16
  Speaker 1: so stocks can do okay over time. David, what's the
• 22:20
  Speaker 1: best idea that you've heard recently and maybe actually actioned
• 22:25
  Speaker 1: on it? Well, generally, as you know, we look at
• 22:28
  Speaker 1: things at six to twelve months. So what I might
• 22:31
  Speaker 1: put out as a good stock idea today probably looks
• 22:34
  Speaker 1: pretty stupid today, but six and twelve months out we
• 22:36
  Speaker 1: think will make you money. Uh. So you know, we
• 22:39
  Speaker 1: like a lot of stocks here again longer term, so
• 22:42
  Speaker 1: companies like Comcast, FedEx Us, Bancorp, Metronic, and Gilead. On
• 22:46
  Speaker 1: the value side, we think are really good businesses at
• 22:49
  Speaker 1: a very attractive prices. On the growth side, Google had
• 22:52
  Speaker 1: a great quarter, Microsoft had a great quarter, Thermo Fisher
• 22:55
  Speaker 1: had a great quarter, and you're paying about twenty to
• 22:58
  Speaker 1: twenty four times earnings of those companies, which is okay
• 23:02
  Speaker 1: for great growth company. So we think that sort of
• 23:05
  Speaker 1: basket of stocks is a very good place to start,
• 23:09
  Speaker 1: and we'd be buying, um, you know, into any sort
• 23:11
  Speaker 1: of down days here. All right, David, thank you so
• 23:13
  Speaker 1: much for joining us. We appreciate you sharing your thoughts here,
• 23:16
  Speaker 1: sharing some names that you guys are looking at at
• 23:19
  Speaker 1: the moment. H David Kat's President in chief investment officer
• 23:23
  Speaker 1: Matrix Asset Advisers here. Thanks for listening to the Bloomberg
• 23:29
  Speaker 1: Markets podcast. You can subscribe and listen to interviews with
• 23:33
  Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
• 23:38
  Speaker 1: I'm on Twitter at Matt Miller. Pet On Ball Sweeney
• 23:42
  Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
• 23:45
  Speaker 1: can always catch us worldwide at Bloomberg Radio.