00:00We have thrown a lot of this market and its economy. How well have we stood up to it?
00:03Yeah, well, I'm really honored to be on this morning right after you say it's been the worst
00:07month. So I'm glad that we're closing out this month. But it's just been extremely volatile.
00:12And I think investors don't really know what they're supposed to make of all of this. Is
00:18this temporary? Is it more lasting? I can tell you that conversations are only just now starting
00:23to change to could this have a real impact? And where can I sort of hide out during this
00:29time? Whereas it's taken up until now with the conflict lasting longer and longer and
00:35longer than people thought to for people to really start to ask, wait a minute, is this
00:40going to be bad? When we say to the bulls, what is anchoring your view? They usually have the
00:44same answer earnings and the outlook for corporate earnings is getting better, not worse. What's
00:50your view on that? And does this threat threaten to upend that story?
00:54You know, I think I think there are pockets where earnings can get better, not worse. But
00:59I think that if we think broadly, businesses are not going to have to absorb the higher
01:04costs of energy and inputs. I mean, we know how this works. It's just delayed. But we we
01:12aren't broad sellers of U.S. equities here. There are pockets that have been oversold where
01:19investors can still get in and have a nice upside to that. It's just that you've got to be a
01:25stock
01:26picker here. And you also need to be maximum diversified across all asset classes. This is
01:35about risk reduction. We are in a time where we need to be reducing risk. And it doesn't appear
01:41that there's enough of that going on. How do you reduce risk when it's unclear what the bigger risk
01:45is, whether it's inflation or some sort of downturn to growth? I think the only option is just to be
01:49diversified across all asset classes. So so within global equities, you know, choosing within emerging
01:57markets, LATAM over Asia, still preferring U.S. equities over other global equity markets, but being
02:07diversified across bonds and cash and real assets and alternatives. And so it's diversification is really
02:14the risk reduction. How much have longer term returns in risk assets? I'm talking about some
02:20of the major benchmarks and stock indexes and even some credit been reduced just simply because we're
02:27now at a higher inflation rate. People are paying a premium for physical goods and there's extra policy
02:32uncertainty that is leaving a lot of people without the appetite to really pay the multiples that they
02:37were paying before. Yeah, well, I think that's what we're seeing in sort of this volatility of people
02:42trying to find some footing and trying to time the market, really, which is never wise. Just don't
02:50try to time the market. And so you want the reason why we always talk about which is the most
02:55boring
02:56conversation to have with an investor is diversify, diversify, diversify. It's just that this environment
03:01is just too uncertain. And I see a lot of disconnects out there, more so than I think I can
03:08remember in
03:09some time in terms of people's expectations versus what what I think, at least what we think is likely
03:14to happen. I don't think recession risks are high enough. I think they're probably 40 percent odds of
03:20over the next 12 months of a recession. That's uncomfortable. That's really uncomfortable. And I
03:26don't think that that's priced in. I think that the market pricing out the prospect for Fed cuts is
03:32absolutely ridiculous. I mean, the Fed is going to respond to what is going to be a big hit to
03:40aggregate demand for businesses absorbing costs and for households having to absorb costs and change
03:46behavior. That changing behavior has a gravitational pull on inflation. So, yes, it stays the Fed's hand for
03:52now. They will be cutting, though, because we're going to stop spending on expensive things and switch to
03:59less expensive. It is just tried and true cyclical behavior. There's nothing that's changed there.
04:05And so that's another disconnect that I see as well. So I think there's there's still a reckoning
04:11to come. And especially, you know, how can we have elation over being told the conflict may last
04:19only two to three weeks more? It's already lasted weeks and weeks more than people thought. And so you
04:28could open up the straight tomorrow and have normal flows, which, of course, wouldn't happen. Let's
04:33say overnight we get normal flows. Impacts are still coming. And so I just think that we've not
04:39braced for that. Damage is done. When did you start to think this is going to be have a lot
04:44longer
04:44term impacts? A lot of people in the market were saying we're going to get through this in one or
04:48two weeks. When for you was that moment? Well, I think, you know, one of the the benefits that I
04:54have now being at a large wealth manager is that we have access to experts. I mean, one, the CSIS,
05:05the Center for Strategic and International Studies, never before have I used them so much. They are an
05:10incredible source of experts on global global developments. Speaking to admirals, Admiral McRaven,
05:21four star admiral, Admiral Stavridis. These are people to speak to that have been very, very accurate
05:28when we've had conversations with them on what to expect and how long this could last. And they have
05:35been right. But that's not broadly embraced by by the market.
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