00:00Well, I'm not sure that it's the higher yield that's going to hit oil, but I do think it matters
00:04in terms of consumers in Texas.
00:06I mean, just like everywhere else, they're looking at, you know, car loans.
00:10And we saw the 30-year mortgage go, what, 717, I think we saw at the end of last week
00:16or even yesterday.
00:17So, yes, it's going to hit consumers and pull the economy down, which then will flow into demand for oil.
00:24But is it hitting oil per se right now?
00:26You have a really tight correlation, tighter than we've had in a long time, between oil prices and the 10
00:33-year Treasury.
00:33It's part of why we see it moving higher right now.
00:36So you'll continue to see pressure.
00:39So you're Houston born and bred?
00:42I am, yes.
00:43So you guys always have an opinion on oil.
00:48Is it too high now when you talk to your friends in Houston?
00:50Are they a little nervous that maybe it's too high?
00:52Is it ever too high?
00:53I don't know.
00:54I don't know.
00:56Well, it's too high for, as we were just talking about, the consumer.
00:59It's too high for a consumer component.
01:01And then at some point when that demand pulls back, that's not good, right?
01:05There's going to be that supply-demand component that comes in.
01:08Because we have supply issues right now, it's going to be supportive regardless.
01:12Now, obviously, in Texas, gas prices are a little bit less than you see in other areas.
01:17So we're not getting hit quite as hard.
01:20But what it is doing is allowing these oil companies to build up those balance sheets to get that free
01:25cash flow.
01:26You look at ConocoPhillips.
01:27Their free cash flow has grown immensely.
01:30We like that for a company.
01:32Given the tensions that are out there, do you hold firm in equities?
01:37Is there a tendency to lighten up and move marginally to cash?
01:41Or do you take the uproar and say, let's keep going, fear of missing out?
01:45Not that we would move to cash, but we would take a little bit off the table on some equity
01:50names and move it into fixed income,
01:52where if I can get now a 5% coupon, a 5% yield on a 10-year, I'm willing
01:58to do that for clients to generate some consistent cash flow for them.
02:01So when you've got almost parity between the yield you're getting out of the equity market and a 10-year
02:08treasury,
02:09it gives us a little opportunity to lock that in for clients.
02:11What's the mood of clients now?
02:14At Crossmark Global Investments, a bunch of fancy people,
02:18are they locked into what I see on the Bloomberg Launchpad screen?
02:22Or are they just moving on in a 5%-plus nominal GDP economy?
02:27Yeah, I think most of our clients are moving on right now.
02:30We have—
02:30Boom economy, let's go.
02:31Yeah, they're happy with where their portfolios are, on how they're performing.
02:35They like to see the equity market move higher.
02:38Yes, there's some volatility, but you know how we take a little bit more of a value approach on the
02:43equity side for our clients.
02:44So they're not as concerned with, you know, a huge overweight in AI or in tech that's going to cause
02:51them to be concerned going forward.
02:53So our clients are pretty comfortable right now in where they're positioned.
02:58Earnings have been so strong, really.
02:59So strong.
03:00I mean, the first half of the year just has been extraordinary.
03:02How do you think about the earnings as a driver for this market going forward?
03:06They, in my opinion, have been the driver.
03:09They are the foundation that has been keeping this economy up right now.
03:13My concern is that we're going to have some of these pipeline cost pressures, whether it's diesel, whatever it may
03:19be, start to flow through.
03:22That's going to compress margins.
03:24Then we're going to have earnings start to falter.
03:26Yes, I know we're, what, 28% for the third quarter, 25%, 26% for the fourth quarter in earnings
03:32expectations.
03:33But you go into 2027, and those numbers come down significantly.
03:37You're in single-digit growth earnings.
03:40Is that going to be the catalyst to pull the market back?
03:43I think it is.
03:44A couple more minutes here.
03:45Victoria Fernandez, Chief Market Strategist, Crossmark Global Investment.
03:50She owns, I say owns, Houston.
03:52We're thrilled she's in our studio today.
03:54In Florida, there's an understanding of constraints, limitations to growth, water, crocodiles, you know, all the usual worries that dolphins
04:04can't play football.
04:05Texas, the psychology is it's unbound, like the new stock exchange down there.
04:11There's endless land in that.
04:13Is that a myth, or is it really Texas unbound?
04:17Well, I mean, I think if you watch the UT game this weekend, we were pretty unbound, right, in that
04:22fourth quarter.
04:23But I do think there's a lot of opportunity when you look in Texas.
04:27Yes, the land mass is huge.
04:29There's opportunity there.
04:30We've had a huge influx in the population that's coming in.
04:34So there's a tremendous amount of opportunity.
04:36We have tech companies coming in.
04:38You know, Austin is a huge tech hub.
04:39You have private equity coming in.
04:40We do.
04:41Mark Rowan is moving there.
04:42Apollo's moving there.
04:44Oh, yeah.
04:44So there's a lot of growth potential there.
04:46And we have the infrastructure is being built out.
04:50I mean, it's construction everywhere.
04:51And we have employees in order to fill those jobs.
04:54Is there a constraint like water or the Cowboys not winning?
04:58I mean, is there like a constraint?
05:00I don't think there's a constraint like that, per se.
05:03I think the constraint can be if it grows too quickly, what does that do to infrastructure in the state?
05:09That's where I actually think we could see a constraint come in.
05:12But I don't think it's a commodity component.
05:15Now, you're a Texas native.
05:16I mean, there are parts like states like Idaho and Montana and Colorado that are like enough people from California.
05:22We've had enough.
05:23What's Texas like for all these newcomers coming from all over the country?
05:27How's it been?
05:27How are they thinking about that?
05:28You're a native.
05:29How do you think?
05:29How do you guys think about that?
05:31Yeah, I mean, it's interesting because people automatically think Texas is homogenous, right?
05:35That it's all the same across.
05:37But it's not.
05:37Different parts of the state are quite different, right?
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