00:00When we sit here and say earnings expectations improved throughout this crisis, where have those earnings expectations actually seen the
00:07greatest improvement?
00:08Is it just an energy story or is it in another sector, in more sectors than just one?
00:13Absolutely. And that's actually a very important point.
00:15So when you look at how the earnings expectation improved, it certainly obviously did in the energy sector.
00:21But it was quite concentrated outside of that in tech, actually.
00:26It wasn't broadly across every sector.
00:29We saw it in tech. We saw it in communication services, obviously in energy.
00:34And then outside of that, things remained quite muted.
00:39So I would say as we go into this earnings season, as opposed to every other time when there is
00:45a revision lower and then you beat earnings expectation this time around, I think the bar is a little bit
00:52higher.
00:52Obviously, we've seen this move. We've seen this value creation.
00:56We're seeing tremendous amount of inflows. These are all good things.
00:59But I wouldn't be too complacent. And I do think, you know, all of the earnings expectations that have been
01:05revised higher, we have to see that realized.
01:08And obviously, we're watching tech very closely and we're telling investors, go back to focusing on that AI theme, on
01:16that tech, on that growth part of the economy.
01:19If you have all of these companies that are beating expectations, raising forecasts, a consumer that's strong, and you have
01:26a lessening of some of the tensions in the Middle East, then how much do inflationary pressures really start to
01:32kick in, especially if commodity prices are just persistently higher for the foreseeable future?
01:37Absolutely. Absolutely. So this is something that, you know, I've been telling clients that this is a good time to
01:43add some inflation protection to your portfolio.
01:46You know, we've been recommending STIP, which is sort of the zero to five year part of the curve.
01:51One of the benefits in having that is you're tied to headline inflation, which obviously, as you said, Lisa, is
01:57going to continue to move higher, at least in the short term, while at the same time, we saw some
02:02encouraging signs in the CPI data last week, where at least some parts of shelter inflation are moving lower.
02:08If you look at the sort of the three month or six month annualized data for shelter inflation, that is
02:13below that 3 percent level, which allows the Fed maybe to at least stay on hold.
02:17So certainly think about ways in which in the near term, maybe the three to six month period that you
02:23can add some inflation protection, whether that's through TIPS or whether that's through a broad basket of commodities.
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