00:00I want to ask you about Tesla specifically or, you know, the lost EV incentive, but we did hear
00:08and we are expecting many more tax incentives and one big, beautiful bill for the beginning
00:15of next year. And you think that's going to keep us from much slower growth?
00:19Yes, absolutely. I mean, anecdotally, I owned a Tesla Model Y. Unfortunately,
00:25it got in an accident and we had to get rid of it, but I replaced it with a combustion vehicle.
00:29Oh, really? That's it. Ed, by the way, I know drives a Tesla Model Y as well. He's a big fan because
00:35it's autonomous. It drives him back and forth. I know. He's in a little trouble with the Golden
00:38Gate Bridge. What's the outlook here for 2026? Because we had fixed income. You guys had a
00:44great year in 2025. High single digit returns here. What are you looking for for this year?
00:48So as Matt was saying, you know, this time last year, we were actually much more negative. We
00:54were actually thinking there was a very high chance there was going to be a recession in the U.S.
00:59Clearly, the data so far has shown that that is not the case. We don't have Q4 numbers yet. Obviously,
01:05we had the government shutdown in the very beginning of that. But all signs are pointing to
01:10a reaccelerating or stable U.S. economy. That being said, we do think that the first six months of
01:182026 could be a little bit slower. We'll see how the holiday shopping season kind of pans out. But
01:24we're seeing this K-shaped economy where high-end consumers, the top 10 percent, represents 50 percent
01:31of consumer spending. So that bottom 90 percent of consumers likely to pull back, right? Especially in
01:39the EV market. They're not getting these tax incentives. The top 10 percent was never qualifying
01:44for them, right? So in the second half of the year. I don't think they're buying any new cars,
01:48by the way, the bottom 50 percent, right? New cars are too expensive. I think the average
01:51car price is now over 30,000, right? Over 50. Over 50. Oh, my gosh. Yeah. It's crazy. But listen,
01:56we have a K-shaped market as well. Very. I keep waiting for this broadening out. And when I came
02:02in this morning, I typed most U4 into my Bloomberg terminal. That shows you the pre-market
02:07movers. And the winners today are the winners of last year, right? Vertiv, Micron, Western Digital,
02:16Palantir, Tesla. It's just the same kind of like high-bandwidth DRAM memory makers that are
02:23gaining ground again. When do we see this broadening out? So that's what we're thinking. So I think
02:29this first half of the year is a great opportunity to start thinking about the opportunities to broaden
02:36out because we expect that through this volatility in the market, there's going to be opportunities,
02:41both in credit and equities. There's going to be opportunities to buy because the second half of
02:47the year, we're actually more optimistic due to the fact that there will be these tax incentives
02:52flowing through. We will have a new Fed chair in place. Some of the uncertainty around monetary policy
02:58will be settled with the new Fed chair. So I think towards the second half of the year, you're going
03:03to get more clarity or you're going to get a little bit of a more reacceleration. So I would say now is
03:08the time to really look at options that are undervalued, that have underperformed a bit that might come
03:14back. How much credit risk do I want to take in 26? High yield really paid last year. It did. And we do
03:21like select high yield names, but you have to be cautious, right? Spreads are historically extremely
03:26tight. So absolute yields look great. So you're getting seven, eight percent in high yield. But in terms of
03:32credit spread, you're not really getting compensated much for taking additional credit risk. So, you know, you have to
03:40be cautious. We're active investors. So we are thrilled in this market because we're looking for these really special
03:46opportunities to find. We're not just buying beta. I wouldn't do that. But investment grades also offering pretty
03:52attractive yields. And you're getting five, six percent there for, you know, a rated bonds. What do you think about the Fed,
03:59Joyce? I mean, do they continue to cut as the 10 year continues to rise? You know, because we've seen that
04:07divergence. And well, we only have 30 seconds left. So just that we do think that, you know, the steepening of the yield
04:17curve has been, again, very positive for fixed income investors. We believe that the Fed is likely to only have one cut this
04:24year, despite a new Fed chair coming in. The data, again, economy is resilient. Unless unemployment spikes considerably, one cut is
04:33really our call.
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