00:00I find it interesting that you said what you probably should do is pair back some of the stock
00:03overweight and wait for opportunities. You didn't say pair back some of your stock exposure and go
00:08into bonds because bond yields are so high. So it might be a good time to exploit that and get
00:12some income. Why not? Why is that not the obvious playbook right now? That's a great question. I
00:17think the simple answer is because bonds are not working as a hedge. If you look at the relationship
00:22between stocks and bonds right now, in other words, the correlation, it's the most positive
00:26it's been in years. By some measures, it's the most positive it's been since before the tech
00:30bubble burst. So this is one of the challenges in a multi-asset portfolio. It's very hard to find the
00:36hedge right now. Bonds are not working. They're selling off at the same time as stocks. Gold has
00:41been a tough play this year. The dollar is steady but not really offering much convexity. You know,
00:46honestly, the only thing that I have a lot of conviction in right now is a hedge against equity
00:51risk is the most obvious, which is to own energy stocks. Because if the proximate risk to the
00:56market, the risk to rates is higher oil, the one thing that is working in that environment is to
01:01own energy and have a bit of an overweight in that sector. What would make you want to go into
01:05bonds
01:06again, Russ? I mean, I ask this, and we'll get to energy in just one second, but I ask this
01:10ahead of
01:10a bunch of central bank decisions that could potentially change the backdrop. I think if the
01:15question is when you say bonds, because we do have a significant position in bonds and credit that we're
01:19very comfortable with, but if you're thinking about what would make you want to go out and buy
01:23the 10-year, is a hedge against equity risk? I think it goes back to what I was talking about
01:28a moment ago. Are you starting to see signs that the economy is really softening in some of the
01:33near-term data? That's not there yet in the economic data. When we talk to companies, when we talk to
01:39retailers, we're not seeing evidence of the consumer softening. That is what would have to occur
01:44to have more conviction that yields are going to go down and that bonds would actually provide
01:49some hedge against equity risk.
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