. they wanted to Institute ░░░░░░░░ student loan forgiveness and ░░░░░░░░ in Congress say if ░░░░░░░░ ruling goes a wrong ░░░░░░░░ to their liking they ░░░░░░░░ initiate legislation to hopefully ░░░░░░░░ some relief saying it ░░░░░░░░ crushing millions of Americans ░░░░░░░░ news power by more ░░░░░░░░ 2700 journalists and analysts ░░░░░░░░ over 120 countries In ░░░░░░░░ Francisco I met Baxter ░░░░░░░░ this is Bloomberg All ░░░░░░░░ Eddie thank Hugh let ░░░░░░░░ bring in Our guest ░░░░░░░░ Denbert is with us ░░░░░░░░ is the chief financial ░░░░░░░░ at Main street Research ░░░░░░░░ us from here in ░░░░░░░░ York City James thanks ░░░░░░░░ being with us We ░░░░░░░░ seen over the last ░░░░░░░░ weeks this continue All ░░░░░░░░ of expectations on Fed ░░░░░░░░ are we near the ░░░░░░░░ of this do you ░░░░░░░░ Yeah Doug it it ░░░░░░░░ like deja vu of ░░░░░░░░ right Schiff sort of ░░░░░░░░ off is really aggressive ░░░░░░░░ and then all the ░░░░░░░░ you know again investors ░░░░░░░░ been forwarded to believe ░░░░░░░░ Maybe that was the ░░░░░░░░ of the full market ░░░░░░░░ now I think it ░░░░░░░░ a question and I ░░░░░░░░ our team thinks it ░░░░░░░░ have been I should ░░░░░░░░ for the last 14 ░░░░░░░░ And and that s ░░░░░░░░ you have Fed policy ░░░░░░░░ multiple And you know ░░░░░░░░ would save an investor ░░░░░░░░ we not lined up ░░░░░░░░ to be you know ░░░░░░░░ the end of the ░░░░░░░░ market now is more ░░░░░░░░ year old so the ░░░░░░░░ Bloomberg survey of economists ░░░░░░░░ around a 60 probability ░░░░░░░░ recession I mean if ░░░░░░░░ is your base case ░░░░░░░░ What does it mean ░░░░░░░░ the Outlook for Let ░░░░░░░░ say S P 500 ░░░░░░░░ and I think that ░░░░░░░░ is probably spot on ░░░░░░░░ maybe it could even ░░░░░░░░ and you re starting ░░░░░░░░ see what we call ░░░░░░░░ last phase of bear ░░░░░░░░ usually is the sign ░░░░░░░░ is the earnings start ░░░░░░░░ break and you saw ░░░░░░░░ little bit of it ░░░░░░░░ quarter comes like Home ░░░░░░░░ there s been a ░░░░░░░░ of them you know ░░░░░░░░ estimates guiding lower that ░░░░░░░░ usually that last phase ░░░░░░░░ a bear market So ░░░░░░░░ d say we made ░░░░░░░░ lot of progress and ░░░░░░░░ year in price of ░░░░░░░░ coming down now you ░░░░░░░░ starting to get those ░░░░░░░░ coming down so I ░░░░░░░░ that you know that ░░░░░░░░ forecast probably pretty likely ░░░░░░░░ you re going to ░░░░░░░░ it in the earnings ░░░░░░░░ already have started seeing ░░░░░░░░ I think this next ░░░░░░░░ coming up It s ░░░░░░░░ to be real it ░░░░░░░░ going to be real ░░░░░░░░ that companies are having ░░░░░░░░ with their margins I ░░░░░░░░ t know whether your ░░░░░░░░ at main Street researcher ░░░░░░░░ much on technicals but ░░░░░░░░ was struck by the ░░░░░░░░ that in the wave ░░░░░░░░ or the wake I ░░░░░░░░ say of a lot ░░░░░░░░ heavy selling last Friday ░░░░░░░░ managed to O Thursday ░░░░░░░░ think it was we ░░░░░░░░ above the 200 day ░░░░░░░░ average when that seems ░░░░░░░░ be providing some level ░░░░░░░░ support Does that give ░░░░░░░░ confidence a degree of ░░░░░░░░ that there is some ░░░░░░░░ of structural support within ░░░░░░░░ equity market Yeah Doug ░░░░░░░░ know our team we ░░░░░░░░ at everything except for ░░░░░░░░ astrology Nichols and you ░░░░░░░░ this is this is ░░░░░░░░ of a rerun of ░░░░░░░░ to where you kind ░░░░░░░░ come above that 200 ░░░░░░░░ feels like OK this ░░░░░░░░ now it s safe ░░░░░░░░ right now we re ░░░░░░░░ sitting right on it ░░░░░░░░ you know what we ░░░░░░░░ seen in past their ░░░░░░░░ and even in this ░░░░░░░░ is once you sort ░░░░░░░░ break that which we ░░░░░░░░ foresee in the next ░░░░░░░░ weeks to the downside ░░░░░░░░ get a Russia selling ░░░░░░░░ that Russia selling is ░░░░░░░░ you know another one ░░░░░░░░ those bear market declines ░░░░░░░░ that people say okay ░░░░░░░░ to throw in the ░░░░░░░░ Ok It s just ░░░░░░░░ It s just not ░░░░░░░░ Yeah I think it ░░░░░░░░ sense You re going ░░░░░░░░ market trading 18 times ░░░░░░░░ There s not typically ░░░░░░░░ you find a bottom ░░░░░░░░ Fed policy So if ░░░░░░░░ is a washout To ░░░░░░░░ extent that you think ░░░░░░░░ may be if we ░░░░░░░░ that 200 day moving ░░░░░░░░ I mean is that ░░░░░░░░ blown capitulation and do ░░░░░░░░ step in take up ░░░░░░░░ the cash that we ░░░░░░░░ been talking about the ░░░░░░░░ of money on the ░░░░░░░░ do you deploy it ░░░░░░░░ put it to work ░░░░░░░░ stocks Yeah I think ░░░░░░░░ you know you don ░░░░░░░░ want to be you ░░░░░░░░ t be a short ░░░░░░░░ market time we just ░░░░░░░░ to look at the ░░░░░░░░ that policy If you ░░░░░░░░ at that in this ░░░░░░░░ goes from 18 times ░░░░░░░░ to 15 which I ░░░░░░░░ is really probably where ░░░░░░░░ should be That s ░░░░░░░░ to the old low ░░░░░░░░ lower I think every ░░░░░░░░ should have a list ░░░░░░░░ companies that they were ░░░░░░░░ to buy what I ░░░░░░░░ the bull market The ░░░░░░░░ market port for have ░░░░░░░░ because I think we ░░░░░░░░ getting very close We ░░░░░░░░ one more down like ░░░░░░░░ s going to be ░░░░░░░░ spring maybe early summer ░░░░░░░░ decline And I think ░░░░░░░░ if you ve been ░░░░░░░░ invested like have been ░░░░░░░░ of this period you ░░░░░░░░ want to get to ░░░░░░░░ Take that cash take ░░░░░░░░ short term bond job ░░░░░░░░ get to work and ░░░░░░░░ equities because we re ░░░░░░░░ to be facing you ░░░░░░░░ inflation s gone new ░░░░░░░░ cycle So it s ░░░░░░░░ far away but we ░░░░░░░░ just not there And ░░░░░░░░ does that look like ░░░░░░░░ industry groups that you ░░░░░░░░ may represent the best ░░░░░░░░ going forward I think ░░░░░░░░ s you know in ░░░░░░░░ work shows this you ░░░░░░░░ of all it s ░░░░░░░░ just domestic its global ░░░░░░░░ already see these these ░░░░░░░░ markets doing very well ░░░░░░░░ to the US and ░░░░░░░░ lower price So of ░░░░░░░░ be a global investor ░░░░░░░░ is really are our ░░░░░░░░ and then I think ░░░░░░░░ know like a lot ░░░░░░░░ investors have said with ░░░░░░░░ generally speaking higher than ░░░░░░░░ used to be We ░░░░░░░░ never going back to ░░░░░░░░ Tech s stuff the ░░░░░░░░ does great but there ░░░░░░░░ you want to be ░░░░░░░░ But you don t ░░░░░░░░ to be overweight like ░░░░░░░░ used to have to ░░░░░░░░ and you want to ░░░░░░░░ in those more value ░░░░░░░░ companies particular the financials ░░░░░░░░ too well with the ░░░░░░░░ rates You re going ░░░░░░░░ go back to the ░░░░░░░░ companies the consumer will ░░░░░░░░ revives was consumer discretionary ░░░░░░░░ the material stocks lots ░░░░░░░░ awesome opportunities anyo Here ░░░░░░░░ where you can have ░░░░░░░░ new bull market be ░░░░░░░░ lot wants diverse if ░░░░░░░░ d then the last ░░░░░░░░ markets we re not ░░░░░░░░ Yeah but we have ░░░░░░░░ exciting list the companies ░░░░░░░░ we cannot wait to ░░░░░░░░ ourselves into well you ░░░░░░░░ opportunities offshore I m ░░░░░░░░ about that is that ░░░░░░░░ on the reopening story ░░░░░░░░ China that seems to ░░░░░░░░ wobbling a little bit ░░░░░░░░ mean are there is ░░░░░░░░ Europe where you focused ░░░░░░░░ you know we always ░░░░░░░░ on wherever there s ░░░░░░░░ So we ve been ░░░░░░░░ in China in the ░░░░░░░░ and definitely in Europe ░░░░░░░░ South America So we ░░░░░░░░ always about liquidity in ░░░░░░░░ China reopening is well ░░░░░░░░ I don t think ░░░░░░░░ should really sort of ░░░░░░░░ all their eggs on ░░░░░░░░ that basket you re ░░░░░░░░ out well But what ░░░░░░░░ find great opportunities in ░░░░░░░░ s market is in ░░░░░░░░ Companies like Siemens or ░░░░░░░░ like Novo Nordisk which ░░░░░░░░ a health care company ░░░░░░░░ know these are companies ░░░░░░░░ at much more reasonable ░░░░░░░░ earnings ratios relative to ░░░░░░░░ than what we re ░░░░░░░░ here in the US ░░░░░░░░ mentioned the financials I ░░░░░░░░ imagining that you re ░░░░░░░░ to banks in an ░░░░░░░░ companies here in the ░░░░░░░░ does that extend into ░░░░░░░░ Do you like some ░░░░░░░░ the European banks We ░░░░░░░░ do you know you ░░░░░░░░ got again higher rates ░░░░░░░░ it is We just ░░░░░░░░ out recently You know ░░░░░░░░ this regret raising rates ░░░░░░░░ a global phenomena and ░░░░░░░░ has to look at ░░░░░░░░ European banks just as ░░░░░░░░ as we look at ░░░░░░░░ US banks absolutely I ░░░░░░░░ one origins just are ░░░░░░░░ if there s a ░░░░░░░░ risk here that we ░░░░░░░░ underestimate the stickiness of ░░░░░░░░ I mean we re ░░░░░░░░ about a terminal right ░░░░░░░░ in the US a ░░░░░░░░ point on the Fed ░░░░░░░░ rate maybe as high ░░░░░░░░ 6 and some people ░░░░░░░░ saying it could get ░░░░░░░░ a certain scenario it ░░░░░░░░ get maybe as high ░░░░░░░░ 6 and a half ░░░░░░░░ you take that into ░░░░░░░░ in your work that ░░░░░░░░ may under being underestimating ░░░░░░░░ and rates have to ░░░░░░░░ much above where they ░░░░░░░░ right now We have ░░░░░░░░ inflation There s no ░░░░░░░░ about it in the ░░░░░░░░ is worried about the ░░░░░░░░ Why you know maybe ░░░░░░░░ s going to sort ░░░░░░░░ 50 bases at 50 ░░░░░░░░ know saying it 50 ░░░░░░░░ was they go to ░░░░░░░░ now I think there ░░░░░░░░ even a chance they ░░░░░░░░ to go to 50 ░░░░░░░░ next meeting So you ░░░░░░░░ is a triple rate ░░░░░░░░ to be higher than ░░░░░░░░ most likely in as ░░░░░░░░ as our team is ░░░░░░░░ as long as a ░░░░░░░░ market can discount that ░░░░░░░░ that the terminal rate ░░░░░░░░ go to 6 right ░░░░░░░░ can you know be ░░░░░░░░ bargain before that happens ░░░░░░░░ the future problem that ░░░░░░░░ going to create which ░░░░░░░░ general would probably be ░░░░░░░░ recession so you really ░░░░░░░░ equities they get down ░░░░░░░░ that sort of market ░░░░░░░░ maybe potentially discounting a ░░░░░░░░ that s the 14 ░░░░░░░░ times earnings and we ░░░░░░░░ not there are 18 ░░░░░░░░ there s a next ░░░░░░░░ down get get us ░░░░░░░░ it possibly could And ░░░░░░░░ know then the bad ░░░░░░░░ comes later because you ░░░░░░░░ the bull market kind ░░░░░░░░ ripped right through The ░░░░░░░░ economic climate I m ░░░░░░░░ during about the extent ░░░░░░░░ which the dollar is ░░░░░░░░ part of your work ░░░░░░░░ dollar right now has ░░░░░░░░ a big beneficiary of ░░░░░░░░ expectations We re going ░░░░░░░░ see much higher US ░░░░░░░░ rates do you think ░░░░░░░░ s a lot more ░░░░░░░░ for dollar strengthening we ░░░░░░░░ you know we were ░░░░░░░░ dollar owners throughout most ░░░░░░░░ 2022 and then coming ░░░░░░░░ this year we were ░░░░░░░░ but certainly with you ░░░░░░░░ these lagging indicators inflation ░░░░░░░░ very strong employment and ░░░░░░░░ being very strong it ░░░░░░░░ points higher rates so ░░░░░░░░ think the investor should ░░░░░░░░ Howell less equities here ░░░░░░░░ some US dollar positions ░░░░░░░░ own you know short ░░░░░░░░ paper if you need ░░░░░░░░ own bonds by some ░░░░░░░░ longer stuff that s ░░░░░░░░ and a half very ░░░░░░░░ quality OK James pleasure ░░░░░░░░ you so much taken ░░░░░░░░ to chat with us ░░░░░░░░ damages this chief investment ░░░░░░░░ at main Street research ░░░░░░░░ us here on the ░░░░░░░░ break Asia from right ░░░░░░░░ in New York City ░░░░░░░░ re seeing up mild ░░░░░░░░ off in Asia We ░░░░░░░░ a market holiday today ░░░░░░░░ South Korea Japan down ░░░░░░░░ two tenths of 1 ░░░░░░░░ in Sydney ASX 200 ░░░░░░░░ a half of 1 ░░░░░░░░ DBA coming up this ░░░░░░░░ lumbered ...