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Your Community Bank or Tim continues to be on our radar because it's soaring again and there's a great story. It's a most read story in the Bloomberg really giving us some insight into the deal and kind of the instant paper profit that these individuals are making.
Yeah, we're talking about individuals such as US Treasury Secretary Steve Menushan, who along with his Liberty Strategic Capital, led a group of investors that injected more than one billion dollars into New York Community Bank. And this could only be the beginning with more on the Menution playbook and what is a most read story on the Bloomberg with us as Bloomberg's Catherine Doherty, finance reporter off at Bloomberg
News here in our studio. So, Catherine, it was interesting as this all played out yesterday Carol and I were on air and the stock was halted multiple times. But one thing that we did notice after our Bloomberg News team broke the story was that by the time it started trading again, it was above the price of two dollars, which is the price where Manution and team were able to buy in at.
That's right, they've already minted quite a profit on paper. On paper, but it looks like it's holding out today. So it's been twenty four hours or so, or as we're getting to that point. So it's not to say that this is a forever proven strategy. They're going to have a lot of work to do. It's not just the investment and the number, but it's actually how do you turn this ship around and how do you get your heads together and bring in the best of the best to make sure that this bank has a future.
But the share price is reflecting investors' sentiment, a positive sentiment, and their belief that these leaders and it's not just about the money, it's the people that are behind it that presumably the bet is that they will succeed in turning the ship around.
Let's talk about that and the Minutian Steve Manushan playbook, because this is what's interesting and this was some of what we were getting yesterday, that these are people who are respected investors, kind of know how to deal with this kind of situation. What's the playbook? And let's kind of maybe go backwards right to Indie Mac because right kind of bringing the gang back together, it seems.
So back in two thousand and eight Indie Mac which eventually turned into West West Bank, I believe was the name, and Joseph Auding was the CEO of West of one,
west of that firm. But today again bringing the back together band back together, Adding is the CEO of NYCB now And clearly this is the relationships that have been built in the past, the trust and the knowledge that these leaders have gained in not just finance but in banking, which is a very specific industry to have some of these very strategic plans that they're going to need to set forth in terms of how to diversify the bank,
how to deal with the existing problems that they've already identified. And today they started talking about that to investors.
Well, that's what I want to hear from you. And what do we understand now that they're talking about this, how they shore up the balance sheet especially exposure to commercial real estate.
So executives today talked about the main issue being the loan portfolio and this portion that is specifically linked to New York Office. So they're saying that their goal over time is to diversify the bank. Essentially, what they want to do is make this bank look more like the other regional banks because right now there's so much concentration in real estate, in lending to the landlords of New York City.
Yeah, and we've talked about this that the law changes and stuff has really kind of changed the financial outlook, if you will, of these assets or the profitability one thing I want to ask you about. So as they kind of move forward, investors, the stocks app thirteen fourteen percent just in the last two days alone. But you know,
the Indiemac deal go backwards for a second. There was some criticism of the duo and their past link up ultimately, so it'll be interesting to see how they kind of deal with all these assets that not any deal going forward is ever maybe perfect, that's right.
And so that deal with Indiemac was linked to mortgages. Correct, This is lending, so it's a different business essentially, the lending to real estate firms in two buildings, both for businesses and for landlords, so for commercial real estate and also for housing. Again, these are going to be that's different than lending out or giving a mortgage to some one if they're buying a home.
What do we know about where the money came from for Liberty Strategic Capital at this point and what the former treasure sectary has been doing over the past few years when it comes to fundraising.
So Mnuchin, there has been some pushback which was referenced in this story. There's been some critique because after he left being Treasury he was raising money for Liberty from sovereign wealth funds in the Middle East, and that includes Saudi Arabia's public Investment fund. That is something that was under scrutiny. What I found interesting is that with this deal, Mnuchan was saying that they initially went out with around seven hundred and there was so much interest that then
they raised it to the one billion mark. So it just showed that the enthusiasm that were seen reflected in the stock price from other investors was also there when they were pitching this deal to the street.
Yeah, it is interesting, like kind of when you go through it and you look backwards in terms of the Indiemac deal and just these individuals that have been assembled to kind of again not apples to apples in terms of the bank, but dealing kind of with a I don't want to use the word crisis, but certainly a very troubled situation and trying to figure it kind of the way forward.
Right Well, financially it's a troubled situation, and they're buying in at such a cheap price. These are the types of deals. Think about Warren Buffett coming in and supporting Bank of America in its time of crisis way back in two thousand and seven, two thousand and eight period, and look how that turned out for him. Again, that was a windfall and it was also a lifeline for Bank of America. So it's a very similar narrative that I think a lot of people are comparing this moment
in time too. You have a bank that has fallen on tough times. The share price is showing that, and already the deal and the investors that bought in early have minted a profit.
It's on paper going to say it's only day two, right, day one, I guess you could say day one full day, and they're not out of the woods yet, Kat.
No, they're gonna need to prove that they have the strategies in place. They outlined them this morning, So I think that that is another reason that you've seen the share price remain at a higher level. It didn't jump significantly from where it already jumped yesterday. It's still around the four dollar mark, just below last time that I checked. But you're you're absolutely right. This is a strategic playbook that is needed there. They're going to need time to
show that it's actually working. And I find it interesting the goal of being more like their peers. But this is a large organization because they bought assets from Signature earlier and they've grown rapidly. That was part of its struggle. They didn't know how to deal with that size that they a lot of pieces there, a lot of pieces of the puzzle. All right, Kat Doherty, Financial Porter, a Blomberg News. Thank you so much.
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Well, you might recall that Bloomberg News was reporting out last month on Florida's southwestern coast, long one of America's fastest growing regions, and how it is losing some of its boomtown swagger as a home insurance crisis and other staring costs make homes unaffordable. It's a serious situation, it is.
And at the same time, Carol, we've also talked about how the migration of financial types down south, think Citadel's Ked Griffin Moore are now calling South Florida home and pushing up prices not just of residential real estate, but also commercial real estate too.
All Right, so there's a lot going down down south, specifically in the state of Florida. With all this in mind, joining us to talk about the Miami market specifically with us as Dina Golden Tayer, she's executive director of sales over at Douglas Element. She joins us from Miamia to have you here a lot to talk about. First up, how are you and how would you describe the luxury
market in Miami. I mean, technically you're known as an ultra luxury specialist, So talk us a little bit about demand pricing, what you are seeing.
Thank you so much for having me today. I am indeed ultra luxury specialists focusing on property's ten million and up and our market, as they say, is calliente. And there is no sign of a slow down for the ten million plus marketplace.
All right, drilled down a little bit, so no slowing down. So the same as six months ago, twelve months ago. Give us some more color with Bloomberg. We'd love to dig a little bit deeper. Give us an idea of how it's playing out and how it compares.
Absolutely this time last year, we in fact had a much slower high season, high season being defined as the months of December, January, February, March April, when the snowbirds will want to be here. And this year we're having the type of high seat that we had hoped for last year, which is pending sales almost every other day for high quality assets that are appropriately priced. So if you're watching Zilla, you're going to see a lot of stuff go pending.
Who are the buyers right now and how are they buying? Are these all cash buyers? Where are they coming from? Give us insight there.
They're the usual suspects. They are coming from New York from other Northeastern states. They're coming from California and other Western states, and they're coming from Canada. The European buyer has slowly trickled back into the marketplace post COVID, but they're not as strong as they were in prior years.
What about buyers from Asia and buyers from Russia.
No, and no, and the buyers that I'm working with are not getting mortgages, or at least the deals are not finance contingent.
What's a typical deal on the high end of Miami. You used ten million dollars as a price point. Is that kind of the mean? The median give us an idea because I know that they can go a lot higher, especially if you do something like Indian Creek Village, which Bloomberg has written about as being a place where millions don't matter. It's all about billions and billionaires.
Great article, great job, Felipe. Ten million gets you a nice condo. It gets you a nice house, a very nice house, not in the water, an average house on the water. Twenty million is where it's at if you want something better than nice and my twenty million plus product, I have the shortest days on market than any other
sector that I represent. In fact, it takes me longer to sell properties five to fifteen million than homes that are over twenty million, where I average about one hundred and twenty to one hundred and fifty days on market.
Do you know who's selling right now? Who doesn't want to be there and who wants to sell for these prices?
Sure?
I mean that is a broad question because people selling don't necessarily not want to be in Miami. They may be expanding their family, or they may be going through a divorce. A lot of the people that from whom myself, or they are staying locally, just in a different asset class like downsizing or upsizing, or moving from a house to a condo or vice versa.
You know, Tim was asking earlier Diana about who's doing the buying, and we've talked. You know, Bloomberg has done a lot of reporting about kind of Wall Street South and the amount of financial folks that have moved down there not only to live or buy a second home, but to actually set up shop and do work, and that has certainly had an impact on the Eric. Give us a little bit more color if you can around what you are seeing on that front specifically, is the
pace continuing, is it picking up? Is it slowing down at all?
I think if we compare the pace to the COVID times, it will always feel like a slowdown. Now Miami and Miami Beach, where I specifically focus on, has found a new rhythm. We continue to have an influx of the Wall Street types and other financiers from around the country. They are still taking prime positions at the schools for their children and the top reservations in town because we have pretty much the same restaurants New York City does,
if not better right now. So the pace is healthy, It's just not a COVID pace, and to compare it to that would always look like we're in the run.
What about folks with backgrounds in crypto right now, especially given the rise in crypto that we've seen last year and in recent months.
I'm glad you bring it up, because crypto certainly has had a great couple of weeks, but I have not seen the complete return of the crypto bros. And in fact, when I did work with that fire class, they always paid cash.
Well yeah you know, it's cash is cash? Yeah, got it? Yeah, no problem here. Easy clothes, quick clothes.
But I haven't gotten a few calls lately asking if a seller would take crypto, so it is starting to come back as a subject point.
Yeah, and I guess I was more interested in just the crypto bro's part of it. But I'm surprised that you know, you haven't seen the return of crypto bros completely that we saw a couple.
Of years ago.
No, and even you know they're already down here, they've already established residency. So if they're going to be perhaps upgrading because they're cryptos high, great, I'm excited to work with them again. But they're not the conversation at the height of the topics that are being discussed around town.
Dana. This is a market you've been in since two thousand and five, so if you've seen a fair amount of cycles, including the Great Financial Crisis, you've seen obviously the pandemic and then some I am curious about how this market has evolved, how it's changed in terms of pricing and demand. What can you tell us about that, because that's a fairly long tenure and some great insight.
Absolutely, I mean, the market has completely changed the type of buyers that were attracting to our marketplace. I don't think anyone thought that Miami would be competing with buyers looking at London, New York, Hong Kong, that they would look to us as their first home. It's very clear that Miami is the top city in the country right now.
LA and New York don't have anything on us. Clearly, I'm a cheerleader for my marketplace, but having traveled around the country to the cities where buyers are fleeing from, I can understand, why.
Do you see? You said you saw a slow down in sub ten million dollar listings? Is that the case?
I would say, there's higher inventory and higher days on market. I guess you could call that a slowdown, or I would just say it's not as high as homes.
Of twenty Let's phrase it a different way. Where are they're buying opportunities right now?
Sure they are buying opportunities, definitely in the ten to fifteen million range, because those properties are having higher days on market. There are neighborhoods that are let's call them one notch below the A level, neighborhoods like B plus neighborhoods like Miami Shores or Sam Sushi or a keystone where there are opportunities, whereas in really established neighborhoods like Miami Beach, Golden Beach and Coral Gables, those owners are just holding.
Rates interest rates. Does it even matter? Just got about twenty seconds here.
If interest rates were low, all the buyers would jump back in as opposed to the cash buyers having.
Free ring interesting, so it would kind of give more buyers certainly into the market there, all right, Dina, good to check in with. You really appreciate it, Dina Golden Tear. She's executive director of sales over at Douglas Ellaman. Joining us there from Miami.
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Well, as I mentioned the socks, the Philadelphia semi conductor Indeck sitting an all time high today is chipstocks in March higher, Broadcom reports after the belt also trading near records Carol. At the same time, there are big questions about how chip companies are going to navigate Washington's crackdown on exports of advanced technologies. That's right.
Bloomberg was first to report overnight that the US government is pressing allies, including the Netherlands, Germany, South Korea, and Japan, to further titan restrictions on China's access to semiconductor technology, a controversial effort that is drawing resistance in some countries. This is at least according to people familiar with that matter.
To So for what we need to know about how companies navigate this delicate balance, we bring in the economic historian Chris Miller. He's Associate Professor of International history at Tufts University. He's also the author of Chip War, The Fight for the World's Most Critical Technology. It's a New York Times bestseller. Chris back with us from Boston. Chris, good to have you back. How are you.
Doing well? Thank you for having me back.
Yeah, well, thanks so much for joining us. We always love it when you come on the program. I mean talk about timing with your book. It came out in twenty twenty two. Since then, the euphoria around chips as they relate to AI just has reached fever pitch. I mean, look no further than Nvidia super micro computer and more. How are you watching this as an academic, as a consultant, what are your thoughts?
Well, you're certainly right that AI has really transformed the ship industry. It's the key demand driver go going forward. And the big question hanging over AI is when will we start to see large scale modernization, How soon will that happen? And at what's scaled? Because ultimately, the reason why all the hyperscalers are investing tens of billions of dollars and building up AI infrastructure and buying lots of Nvidia GPUs is because they believe there's money that will
be made at the end of this process. And that's why questions like well how much does Microsoft make off Copilot or what does open AI's revenue look like? These are the key indicators that investors are looking at to assess what will be the implication of AI for corporate profits.
All right in the tech world, though, sometimes you got to build it and then they will come kind of thing. Having said that, you've got a socks Chris that was up about sixty five percent last year, and let me just pull it up on the Bloomberg. But you've got the Philadelphia Semiconductor Index up about twenty three percent so far here in twenty twenty four. It's just one measurement.
Maybe it's not the right one. But would you say that all the enthusiasm has gotten ahead of itself just based on the moves and the share price or it's still kind of hard to tell. As I said, you need to build it and then they may come.
Well, I think it does make sense that companies are investing very heavily in this infrastructure given all of the advances that we've seen in AI and all of the product ideas that are currently being tested and explored by tech companies, and the infrastructure is expensive, there's no way around it, which is why if you're a big tech company, you've got to invest literally tens of billions or else
you fall behind in your data center build out. But the question again is going to be how long can this be sustained without monetization And the good news is that there are early signs that it is possible to make money off of AI products. We just need to see more evidence of this at more companies to justify ongoing expended shares of this level.
Well, Chris, how do you distinguish between the names in the space, and when you talk about monetization and video is certainly the one that we bring up right, and their numbers continue to surprise to the upside and give us some of that affirmation if you will, about maybe the potential for AI. It's not just dreams, it's it could be a reality because you see it in their numbers. Having said that, go back to distinguishing the names in
the space. You've got the once giants or leaders. I'm thinking of Intel, Texas instruments, the new leaders, Nvidia, AMD has come so far, the company that seems to stand alone, TSMC, the semicon depwork companies, the equipment makers, Like, how do you distinguish How should the Bloomberg audience be thinking about a space that's got a lot of different names in them.
Well, the good news is that as AI advances, you actually need more types of chips in larger quantities to take advantage. It's not just the AI processors that you need that in Vidia produces. It's also more memory, especially the high bandwidth memory produced by companies like Skahi x or Samsung. And you also end up needing more mixed signal and analog chips because these are the chips that collect the data that's then being processed by AI systems
and semi autonomous cars, for example. So that's why the boom and AI has benefited most companies in the industry, even if they're not directly producing the GPUs that are at the center of AI. And it's also why it's not just the chip designers themselves, also the tool makers from ASML to apply materials that are benefiting as chip
making companies buy even more tools. But ultimately all of these do depend on their end customers continuing to invest in more and more semiconductors, and that's where the capital expenditure decisions of the big tech firms Microsoft, Google, Amazon and others will be e to sustaining this level of investment going forward.
Chris, I want to go back to monetization, and I'm so glad you brought it up, because it's something that we talk about a lot. We understand the beneficiaries on the chip side of AI, but at the same time we do see company stocks near all time highs for companies investing in this type of technology, including meta platforms,
Microsoft on the private side, Open AI, and others. What are the indications to you that we are seeing monetization at this point and when, in your opinion, do you think we're going to start seeing real eff efficiencies as the result of AI.
Well, I think the good news is that if you look across a much broader cross section of companies, take the forty five hundred in aggregate, most companies on that list are at least exploring ways that they can use AI, either to refine their products or to drive down costs.
And so the key it's not going to be I don't think any individual company or even any individual sector it's going to be, and many different sectors learn to apply AI for many different use cases and that makes it harder to measure, But it also makes AI probably more sustainable in the long run, if it's not one or two killer applications, but rather a lot of uses that end up being a creative either to company's profits
or to driving down their costs. But for investors looking at this base trying to understand how real is this and how sustainable is the investment, it means you've got to look at a much broader cross section of companies to ascertain where is AI actually gaining traction?
And how do you roll into something like you know, Apple's making chips, Microsoft alphabet Google right, Like, it's just kind of getting crowded, you know, more crowded if you will. I mean, how do you roll those guys into the already established, established players. Do you see them in the near future or in the longer term as being really pretty formidable in this industry?
Well, I think they are in some ways already competitors to companies like AMD or in Nvidia, and companies that are big enough to have scale the data center business like those that you mentioned, have a strong incentive to design their own ships, both because they can own their design so that they specifically match the workloads that those companies are running the data centers, but also because the more choice they have both in house design ships and
externally designed ships, the more pricing power they hope they can win. Visa be their biggest suppliers companies like in Nvidia for example, And so there's a market rationale as well as the technical rationale for companies to design their own in how ships and what we've seen that, as you said, as a trend where almost every big tech company is now designing not just often one ship for themselves, but multiple different types of chips for their own data center efforts.
We want to move on to the actual chip war, which is what your book was all about, because we feel like it just is picking up tensions. But before we do, which among the semiconductor companies that are out there do you find most interesting that you think we must I think about the investing audience of Limerick must always keep on your radar.
You know, a lot of people who are only paying attention to the space and alongside the rest of the tech sector don't often focus enough on the tool makers, the companies that make the tools that make the chips possible.
But if you look at the extraordinary growth and the industry over the past several years, it's not just the chip designers like in Video or AMD, it's also the companies that produce the tools ASML or Land Research or Applied Materials that are benefiting just as much from a lot of the growth industry.
Okay, so let's you mentioned ASML, So we're going to talk about related to that company, some of the tensions that we reported at the top. The US China battle for tech supremacy. Chips are certainly at the top of the list. AMD hitting roadblock this week because of US rules. Take a step back and just give us your impression about why the US is now pressing allies to make sure that China doesn't get its hands on certain types of chips, Like big picture, what's worst case scenario here?
Like why does the US and its allies want to keep China from getting this technology?
The US strategy, I think is pretty straightforward, and the dilemma of the US faces is this, by any metric, China will quantitatively outproduce the US in terms of military systems, whether it's ships or missiles or drones. China already has more and it will have even more of a quantitative
edge in the future. So the US is hoping it can retain its qualitative edge in terms of defense and intelligence system by applying advanced computing and AI to defense, and doing so requires having better advanced computing and better AI than China. And that's at the core of what
the US is trying to accomplish here. It's laser focused on AI chips and the machines that are capable of making cutting ANGI chips with the aim of restraining the growth of China's AI ecosystem and keeping a technological edge that the United States has had for the past several decades.
Well, having said that too, you know, with that in mind, and I keep thinking about TSMC, you know, the ultimate fabricator. I mean, people can design chips, but ultimately they go to TSMC to make them and spit them out. How critical is it for the United States or other countries, you know, to back off of their dependency on TSMC.
Well, I think you see a lot of interest in the US and Europe and Japan and elsewhere to have a more diversified manufacturing footprint, which is partly why TSMC is building new plants in the US, in Japan and in Germany. But the reality is, when it comes to AI processors in particular, like the GPUs that in video makes, almost all of them are manufactured by TSC in Taiwan. So thus far we haven't actually seen much diversification, at least when it comes to these ultra cutting edge chips.
So how critical is it for the US to reduce that dependency.
Well, I think you see that the United States spending a fair amount of money trying that Chips Act is going to spend forty billion dollars precisely on incentivizing firms to build factories in the United States, and Japan and Europe are doing the same thing.
Does it go far enough here in the US, because we have seen some prominent players pull back and scale back on some of these plans in the US.
Well, I think it's never going to be easy to see supply chains shift in a big way over a
short period of time. The chip supply chain and the role of SMC was built up over many decades, and so it's just implausible to imagine the shift is going to happen quickly, and it's not going to happen quickly, both because it's hard and slow, but also because the reason TSMC has such an entrenched position is because its economies of scale have given it a technological edge, and so it's not just about any individual type of technology
or subsidy for any individual factory. It's the entire business model that gives TSMC its position, and that's why TSMC is going to be very hard for any of its competitors to dislodge at the top of the foundry market. And why I really think most of the industry is expecting TSMC to remain the dominant player for a very long time to come.
Is it realistic to think that if the US is successful in cutting off this technology to China, that China will not develop this on its own. I mean, after all, last August we got the news that in this Huawei phone there was a chip developed that was more than a generation ahead of where the US had sought to halt China's progress.
Well, I think China is no doubt going to try to keep developing it's both semiconductor and at AI capabilities, and there are a very large number of very well trained, intelligent people in the country who are going to be focused on this effort. I think the question is really what's the technological gap between, for example, the tips that can be made in Taiwan and the tips that can
be made in China. And what you find if you look closely, is that for certain types of chip that gap has closed someone but there still at least four year gap, maybe a five year gap between the cutting edge Taiwanese capabilities and the most advanced capabilities today in China.
And we'll see if China can close that further, but the US is trying to prevent that, both by incentivizing it companies to race forward technologically via the TIPS Act and other R and D funts, but also by making it harder and harder for China access cutting edge chip making tools.
Chris, forgive me if I sound naive, I mean the stakes I understand as you lay it out very high. We know we've been reporting all the stories for countries, for companies right this tech battle for supremacy. Why does it have to be a fight. Why is it a fight?
Well, the first ships that were invented were emerged essentially for use in guiding nuclear missiles more accurately, and since then, militaries and intelligence apts have seen computing as core to their ability to produce next generation systems. And at a time when you see every major defense ministry, whether it's in Beijing or in Washington or Tokyo anywhere on the world, they're all right now trying to deploy AI to military systems to make them more capable, more efficient, more accurate.
And this means that AI is not only going to be powering systems like chat GPT, It's also going to be used in military and intelligence uce cases as well, and that is a sphere where there's a really severe competition right now between China and the United States.
Hey, Chris, we only have thirty seconds left. But you're also a consultant for several different firms or in depth several different capacities. I should know what's the number one question you get from executives at the companies you work with.
The key question companies are asking is both what's next and and also what's next in Washington in terms of the types of regulation that we're going to see either from Congress or from the next presidential administration.
We'll see if we get any clues in the State of the Union tonight when President Biden takes to the country. All right, listen, Chris. Incredible. Chris Miller Associate professor of international history at Tufts University. His book Chip War, The Fight for the World's most Critical Technology. Feel like every day there's a story somehow on the industry or about kind of the battle between nations and the concerns and the constraints. You know.
It's one of Barack Obama's favorite books last year.
That's pretty cool, Chris, Thanks so much. This is Bloomberg.
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Let's get a big picture outlook from Tersey McMillian, head of Global Acid Allocation Strategy at the Wells Spargo Investment Institute, joining us from Winston Salem, North Carolina. Tracy, how are you.
I'm well, Thank you well.
It's good to have you back with us. I do want to remind everyone since October the S and B five hundred is up more than twenty five percent. We do have lots of market voices coming on saying there's still room to run higher this year. You argue, though, that now is the time to start being defensive when it comes to equities and fixed income.
Why that's right. We are a little more cautious here, and you know, it does look like this is going to be the seventeenth positive week out of the last nineteen weeks for the S and P five hundred, So you know, we think a pullback is probably due here and it's probably going to come in conjunction with an economic slowdown that we see emerging over the next couple
of quarters. So you know, we might see a spring summer soft patch and that would set the stage for a rebound towards the end of the year, and we think that will be the out opportunity for investors to broaden out their equity exposure.
Well, it's interesting, all right, So a little bit of a pullback, So you're just saying, yeah, so how much of a pullback did you say? Or did you not?
I did not, But a ten percent pullback is not at all uncommon. We typically do see about a ten percent pullback every year.
All right, So just normal, nothing fundamentally wrong. It's just a case of taking some of the fluff out of the market or the run up, right, Just a little bit of kind of taking some of that out, correct.
That's right.
Yes, I'm just looking for, you know, some of the accesses to come out of the market. And if we were to see a pullback in the S and P. Five hundred, we think that some of the other areas of the market that have been underperforming large caps, like small caps, emerging markets, the riskier corners of the markets might perform even worse and provide a better entry point. So at this point, we've been cautious over the path just a couple of years now and been overweighted large caps,
and that's been the right place to be. But we're just looking for that opportunity to take something out of fixed income, move it into small caps, perhaps even emerging markets down the line.
I want to go back to this idea of there being an economic slowdown later this year. We're going to get the February employment report tomorrow. We got CPI next week. Tracy, what are the indications now that we're starting to see a slowdown that could emerge in the next couple of quarters. What do you see?
Yeah, there are a couple of things. So we are seeing the labor markets starting to weaken on the fringes. So what we saw yesterday in the JOLTS data was that there were fewer quits. We've also seen that current job holders are more concerned about getting a job if they were to lose their job, and so we're starting to see some weakness there in the labor markets around the edges. Tomorrow, we're going to be watching for the number of hours, the weekly hours that employers are asking
of their employees. We're going to be looking at temp workers to see if that's an early sign that maybe some layoffs are ahead. So labor markets starting to cool a little bit. We're seeing some rising default rates in the consumer credit markets, and so that's giving us a little bit of pause as well. But we're again just probably a summer soft patch, a slow down here. Take the opportunity to reposition a bit. But you know, we aren't seeing anything at this point more severe than that.
But time to be defensive, correct in both your equity and fixed income postures.
Yes, yes, so we're just cautious here ahead of a potential pullback. So cautious to us means looking for higher quality equities and higher quality fixed income. We're positioned on the short end of the fixed income curve because we do think rates could move higher towards the end of the year, and so we'd rather be more short term focused.
So that's more defensive, and that defensive positioning and fixed income we think will give us the dry powder to move into other areas of the market when we get more attractive buying opportunity.
Hey, Tracy, it's Women's History month, and one thing that we were talking about and we've been talking about, is the idea that when it comes to women and investing, we don't see the same participation as we do when we see that we see with men. But also at the same time, it's even more important because women often outlive men and need to be planning for the future for even more years on average. Talk to us a little bit about what you folks are doing at the Wells Fargo Investment Institute.
Yeah, happy to. So I've been really following this for about the past fifteen years, and we've done several studies of actual accounts that are managed by women, and what we find is that women consistently outperform on a risk adjusted basis. So we think that's a really important message to get out to women that when they take the step to invest, they're doing a pretty good job managing
their assets. But we do also see that they tend to say they feel less confident about investing, and a recent study that we've just performed showed that fewer women felt that now was a good time to invest, and there was a fourteen percent gap when it came to being confident about where to invest, with only about a third of women, saying that they felt confident. So we think part of that might be that women are less
likely to engage in conversations about money. Gen Z says that they feel judged when they talk about money, and the older generations feel like it's a private topic. So we need to get those conversations started.
Tracy, twenty seconds here, why do you think the women have outperformed?
Oh, we think that they've outperformed because they tend to generate a plan and stick with that plan. They tend to be more disciplined about saving, and they also tend to trade less. So we think that contributes to those higher risk aggested returns.
Wait did you say because we're the better sex? Is that what you said?
I just want to make sure that silent.
Hey, I'm not going to make sure we get all of the data.
Night's not going to do any Tim's splaining men's planning.
Here better not international women's data is tomorrow. It's our day, Tracy, Thank you so much, really appreciate you sharing that insight. Tracy McMillian, head of Global Asset Allocation Strategy, Wells Fargo Investment Institute, joining us from our Carolina. You're listening and watching Bloomberg Business Week and this is Bloomberg.
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