Markets Lack Significant Positive Change, Citi's Moore Says

Watch Markets Lack Significant Positive Change, Citi's Moore Says - Bloomberg on Dailymotion

Transcript

00:00Let's talk about all this volatility over the last month. I remember something you said last

00:04time we spoke. You said, I'm biased to action. I'm biased to action, but in this environment,

00:08you have to be very careful about the decisions you make. What about this new environment now?

00:13Well, sometimes the most important action is not doing anything and actually waiting for more

00:17information if you're going to be making fundamental decisions or if you're using

00:20fundamentals and data and strong database forecasts and to reallocate your money. In this case,

00:27we haven't had a significant positive change. Yes, there's a big change in terms of sentiment.

00:32There was a lot of technical pressure. We saw a lot of the fast money rush back into the market,

00:36but the earning story hasn't changed. The fact that we are in a slower growth environment than we were

00:42three quarters ago hasn't changed. Are we entering a recession? Who knows? I think we're in a period

00:49of slower growth. We were there before the April 2nd tariff announcements and that we needed to

00:53kind of adjust our equity allocations for that slower growth period. And I just don't see any

00:59significant catalyst to the upside in terms of earnings growth or economic growth. Can you share

01:04with us the adjustments you made before the April 2nd announcement and what is defensive in 2025? Is the

01:09nature of defensive stocks different to maybe what it was years ago? Well, OK, yes. Great. Two

01:14questions there. Rotations and stuff before the April 2nd tariff announcements. You know, there were some

01:20allocations to small cap in the portfolio that we took off. We basically said, hey, look, we don't

01:25see as much opportunity for small and medium sized businesses in a slower growth environment, even as

01:29the labor market is reasonably strong. But inflation, we think, would continue to be a bit sticky. And we

01:35just didn't see that upside. Small cap, as you know, tends to outperform when growth accelerates.

01:40The other thing that we've been really debating, frankly, is the U.S. versus the rest of the world.

01:44And, you know, we've seen a significant amount of, you know, investors say, hey, we don't want to own as

01:48much U.S. given the amount of volatility, the policy uncertainty, the growth uncertainty.

01:52And that's all good and fair. But the truth of the matter is some of the highest quality

01:56earnings and cash flow still exists in the U.S. And so as we think about themes and where the

02:01leadership could be in the back half of 2025 and onwards, it may be uncomfortable for some people

02:06that some of that leadership still exists in the U.S. around technology, around spending on AI

02:13infrastructure and around these companies that have outstanding balance sheets, superior management

02:18teams and can really weather the storm of lower economic growth.