RUSH TRANSCRIPT Charles you ░░░░░░░░ for all the twists ░░░░░░░░ turns in the economy ░░░░░░░░ the market since the ░░░░░░░░ has embarked on its ░░░░░░░░ rate hike mission most ░░░░░░░░ Street economists and strategists ░░░░░░░░ bullish or bearish always ░░░░░░░░ to be convinced the ░░░░░░░░ is going to be ░░░░░░░░ right No jerking around ░░░░░░░░ I m always thinking ░░░░░░░░ the line from the ░░░░░░░░ also rises right How ░░░░░░░░ did yo yo go ░░░░░░░░ go bankrupt Gradually then ░░░░░░░░ Joining me now portfolio ░░░░░░░░ Nancy Davis Nancy you ░░░░░░░░ in your note I ░░░░░░░░ reading your note and ░░░░░░░░ kind of warn us ░░░░░░░░ this complacency right now ░░░░░░░░ is it I don ░░░░░░░░ know why because history ░░░░░░░░ us we shouldn t ░░░░░░░░ this complacent and yet ░░░░░░░░ think you re right ░░░░░░░░ data is bad and ░░░░░░░░ s kind of opposite ░░░░░░░░ right With all the ░░░░░░░░ data the ec by ░░░░░░░░ and credit markets seem ░░░░░░░░ if more euphoric so ░░░░░░░░ have to think all ░░░░░░░░ bad data is it ░░░░░░░░ something to get so ░░░░░░░░ about If you just ░░░░░░░░ back everybody was worried ░░░░░░░░ about recession now there ░░░░░░░░ no talk of that ░░░░░░░░ Charles right Everything s ░░░░░░░░ right Charles Charles as ░░░░░░░░ as the Fed I ░░░░░░░░ you re right We ░░░░░░░░ rooting for bad news ░░░░░░░░ week and every time ░░░░░░░░ got some and we ░░░░░░░░ plenty the services pmi ░░░░░░░░ first time in 16 ░░░░░░░░ manufacturing pmi falling through ░░░░░░░░ roof the jobs report ░░░░░░░░ inflation Charles and higher ░░░░░░░░ to go with it ░░░░░░░░ and yet it feels ░░░░░░░░ well maybe if Jay ░░░░░░░░ says you know I ░░░░░░░░ daryl crock on as ░░░░░░░░ as the Fed suggests ░░░░░░░░ won t hike rates ░░░░░░░░ matter what the street ░░░░░░░░ okay with it But ░░░░░░░░ can turn on a ░░░░░░░░ When we started 2024 ░░░░░░░░ market had priced in ░░░░░░░░ cut from the Fed ░░░░░░░░ now we re under ░░░░░░░░ and that s just ░░░░░░░░ a quarter So so ░░░░░░░░ can change And I ░░░░░░░░ you always have to ░░░░░░░░ looking at where assets ░░░░░░░░ priced and equities for ░░░░░░░░ most parent are pretty ░░░░░░░░ expensive And especially the ░░░░░░░░ equities like the energy ░░░░░░░░ The market is kelling ░░░░░░░░ there s going to ░░░░░░░░ more telling you there ░░░░░░░░ going to be more ░░░░░░░░ and there s opportunities ░░░░░░░░ the rates market as ░░░░░░░░ and daryl were talking ░░░░░░░░ right before the break ░░░░░░░░ yield curve s massively ░░░░░░░░ Charles right So for ░░░░░░░░ when you see that ░░░░░░░░ takes it okay bumpy ░░░░░░░░ but he still doesn ░░░░░░░░ see it as a ░░░░░░░░ Remember initially the inverted ░░░░░░░░ curve was one of ░░░░░░░░ best proxies for a ░░░░░░░░ recession Hasn t happened ░░░░░░░░ But where do you ░░░░░░░░ it What are you ░░░░░░░░ from it Well the ░░░░░░░░ curve has been inverted ░░░░░░░░ longer than ever in ░░░░░░░░ lifetime Charles right It ░░░░░░░░ been under zero and ░░░░░░░░ I mean is if ░░░░░░░░ look at say the ░░░░░░░░ year which is what ░░░░░░░░ and daryl were talking ░░░░░░░░ it s higher than ░░░░░░░░ 10 year And so ░░░░░░░░ you think about the ░░░░░░░░ value of money why ░░░░░░░░ people lend Janet Yellen ░░░░░░░░ the U S treasury ░░░░░░░░ for longer and get ░░░░░░░░ less Charles right And ░░░░░░░░ I think really trying ░░░░░░░░ men from it a ░░░░░░░░ in the yield curve ░░░░░░░░ just having even Japan ░░░░░░░░ an upward sloping yield ░░░░░░░░ Theirs is about a ░░░░░░░░ and ours is about ░░░░░░░░ today which is really ░░░░░░░░ given everything going on ░░░░░░░░ the fiscal side Cha ░░░░░░░░ what are you advising ░░░░░░░░ opportunities in this environment ░░░░░░░░ Charles d Charles talk ░░░░░░░░ book a little bit ░░░░░░░░ If you don t ░░░░░░░░ our I ball etf ░░░░░░░░ volatility that benefits from ░░░░░░░░ normalization of the yield ░░░░░░░░ so the yield curve ░░░░░░░░ are from uninverted to ░░░░░░░░ which would be upward ░░░░░░░░ it s currently extremely ░░░░░░░░ this year because the ░░░░░░░░ curve has enaccelerated so ░░░░░░░░ more this year inverted ░░░░░░░░ much more this year ░░░░░░░░ the inversion is that ░░░░░░░░ like that does it ░░░░░░░░ the snapback so to ░░░░░░░░ is also happens quickly ░░░░░░░░ does With Silicon Valley ░░░░░░░░ it was up 4 ░░░░░░░░ 14 7 that week ░░░░░░░░ it has long option ░░░░░░░░ Charles right So they ░░░░░░░░ absolutely lose money all ░░░░░░░░ involves risk but with ░░░░░░░░ option you can have ░░░░░░░░ asymmetric positive whereupon side ░░░░░░░░ great stuff Nancy Great ░░░░░░░░ see you Charles all ░░░░░░░░ folks before I hand ░░░░░░░░ over to Liz I ░░░░░░░░ to talk about the pursuit