00:00Pringles had a slogan, once you pop, you can't stop.
00:03But if you look at the Fed, the Fed popped the rate hike can't,
00:06but this is not a Pringles situation.
00:07In my opinion, it's like a two-and-done, maybe a one-and-done,
00:10not to start with something bigger,
00:12because you think about these hikes were insurance against sticky inflation,
00:16but not a return to aggressive tightening,
00:17because higher long-term yields are already doing the Fed's work.
00:21You think about the 30-year Treasury at 5.3, mortgages around 7%.
00:25You know, market's doing the work for the Fed already.
00:28Markets have priced in too much.
00:30I think the dot plot for 2027 brought the market back down a little bit.
00:34And you think about this, this hike doesn't really change the underlying fundamentals.
00:37Inflation was already slowing a bit.
00:39One thing we like to point to is CPI Core Services was driven by a one-off,
00:44what was it, 5.4% rise in wireless cell phone changes.
00:48So the Fed also can't move oil supply.
00:51So you take all this together, and the divided Fed keeps the uncertainty going.
00:55So we are on the side that we think the Fed will raise rates a little bit less than the
00:59markets have anticipated.
01:00Okay.
01:01If 25 basis points really doesn't change the fundamentals,
01:04and, you know, the fundamentals are what they are,
01:07and you see inflation already having kind of slowed before this decision,
01:12why bother raising rates to begin with?
01:15I think it was more of a credibility perspective, because you think about Warsh.
01:18Warsh is, he's playing this guardian of credibility.
01:21You know, he wants to show that, hey, we can raise rates, we can address inflation if we have to,
01:25while the rest of the committee is saying, let's be a little bit more patient.
01:29And given this divide, what we're thinking is the Fed will be much more data dependent
01:32because there's so much divide going on.
01:35And with Warsh, basically, you know, inflation, the markets are reacting and saying,
01:39with the 2.10 spread narrowing pretty fast, flattening pretty quickly.
01:43This is the market saying, hey, Fed, you probably got this right to raise rates.
01:47Your credibility is back.
01:50So putting that, having that background there, Gene, on the equity side of the business,
01:55how do you think about U.S. versus maybe rest of the world?
01:59Yeah, we are, you know, in our portfolios today with our clients, we're overweight U.S.
02:02You know, we think the U.S. is the place to be.
02:04You know, there's many reasons, the AI story, earnings growth,
02:07despite the fact that, you know, we have a lot of uncertainty.
02:10You know, at the end of the day, earnings look pretty great.
02:13I think also the fact that we are an oil producer,
02:15that's going to help insulate some of the uncertainty around oil.
02:19What worries us about non-U.S. investing?
02:21We saw the news this morning about Saudi Arabia shutting down oil to Europe.
02:26You also look at the fact that we think the dollar, we've been saying this for some time now,
02:29the dollar is going to rally.
02:30The dollar moves higher, putting downward pressure on international, especially emerging markets.
02:35And the key thing, everyone talks about this great rally we saw in stocks last year and non-U.S.
02:40stocks.
02:40Yeah, it was a great rally, but it wasn't a good rally in the sense that it was a lot
02:44of just bad and crappy.
02:46Sorry.
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