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Well.
Tomorrow will mark the beginning of the third year of the Russian invasion in war with Ukraine. On this cusp of another year of war potentially between the two. Likely between the two, the US unveiling its biggest one day sanctions paction package excuse me against Russia since the invasion of Ukraine. They targeted more than five hundred people in entities. It's a fresh bid to squeeze the country's economy, the Russian economy, and send a message over the death of dissident Alexei Navalni.
Here's US Treasury's Deputy Secretary Wally Idayamo addressing the new sanctions earlier on Bloomberg Survey.
Important to remember that our objective remains the same, going after Russia's military and Dutch sized complex and their ability to earn money to prop up their economy and buy the goods they need to fight the war they want. What we're doing today is we are furthering those actions by going after companies in Russia that are helping to build military equipment.
That's US Treasury Deputy Secretary Waliadiyamo earlier on Bloomberg to understand the strategy and endgame of Russia and for President and President Putin, Carol, let's get to the interview.
YEP back with us a favorite informed voice on Russia and President Putin. Angela Stent, Senior Fellow at Brookings Institution, author of Putin's World, Russia Against the West and With the Rest. A former National Intelligence officer for Russia and Eurasia at the National Intelligence Council. Also served in the Office of Policy Planning at the US State Department. This is why she's a favorite voice to go to. She's
in Washington, d C. Angela, welcome back. I have loved our conversations over the past two years, but I have been sad that we've had to keep having them because the war continues on. Here we are about tomorrow the third year of war. Are the sanctions These latest sanctions by the United States, and your view largely symbolic and unlikely to impact Russia and its crusade against Ukraine.
Well, we'll have to see. So far, all of the sanctions that were imposed by the US and its allies, they've certainly dented the Russian economy to some extent, but they haven't changed Putin's course. And right now Putin thinks that Russia is winning. He appears to be very self confident. So we have sanctioned and you know, industries that are
feeding the military industrial complex. We've sanctioned individuals. We're still trying to go out after energy companies in Russia's energy exports and trying to persuade those who are helping Russia to evade those energy sanctions in fact to implement them.
But a lot of this, I fear is symbolic. I mean, we've sanctioned the people who are involved in Navani's death in the prison camp where he was, but they're not likely to want to come to the United States, nor do I think that they have any bank accounts here. So I think there could be more of what we would be doing and that we haven't done, and that is taking the frozen Russian assets, or at least the interest on them, and using that to help support Ukraine,
and we could do more in the energy realm. It's unfortunate that the Biden administration now says that USLNG exports going should cease after a few years, when we should be exporting more LNG, say to Europe, so that they don't keep importing Russian LLERG.
Why do you think the sanctions have been so ineffective at crippling Russia's economy, Because over the last two years, doctor Sten, we have a lot of people on their program who said, you know, especially at the beginning of the war, given the sanctions that the US and a lot of the West is putting on the country, the economy is going to be taken to its knees, and that absolutely has not happened over the last two years.
It hasn't happened because what Russia has done is it's taken its economy to a wharf footing, so it's now really a war economy and the defense industries working over time.
Russia had a GDP growth rate last year of zero point three percent, which was higher than any one thought and higher than a lot of European countries given the situation that we're in, So I think we have miscalculated the Russian's ability to deal with these sanctions, and then I have to say, you know, there's a lot of sanctions, invasion evasion. A number of countries are helping Russia these sanctions, including some of its neighbors in Central Asia. We know
the Chinese are to some extent. So it's very hard for these kind of sanctions to succeed if you don't have really global agreement on them. And it's really only the US and its European and Asian allies that have been implementing these sanctions.
Angela, Will we be having a different conversation if China was more on the side of Europe and the United States in.
This, I think we might because even though so that you know, the president Jijinping warned Putin about the use of nuclear weapons, and we haven't heard Putin talk about that for a long time, although some of his colleagues have. The Chinese they're not really neutral in this. I mean they are exporting components to the Russians that are being
used in weapons and for other industrial uses. They haven't really put any pressure on the Russians to wind down this war, and even though they attended a couple of the first meetings with a number of different countries about the Ukrainian peace plan. They did not attend the meeting in Davos or the one that was held in December. So I would say that they have neutrality but leaning toward Russia. And Jijinping just said again, you know how
great the relationship was. So I think if the Chinese had acted differently, it wouldn't have been as easy for the Russians to be at the point where they are now.
Angela, we saw Senate my majority leader Chuck Schumer make us a prize visit to Ukraine in part well in a big part to try to reassure Volodimir Zelenski that the US will make good on its next round of aid even though it faces obstacles in Congress. What would your message be to lawmakers right now who oppose an aid package to Ukraine.
I think the message to them is if you do not, if we do not send the sixty billion dollars to Ukraine and more weapons, the kind of sophisticated weapons they need, it's going to be very hard for them to prevail against Russia. And I think these people have to think, do you really want Russia to win this war. Do you know what it might mean going forward? It will then reinforce the aggressive tendencies of the Russian regime, and that does not make the US any safer. It certainly
makes our allies a lot less safe. And do we want to be drawn back into a broader European conflict as we were twice in the twentieth century. I think those are the kinds of things they should think about. And also that a lot of this money that we would be allocating to Ukraine goes to US defense companies, so it's money that's being earned and staying in America.
Ukrainian President Zelenski is pressing for NATO membership. Many say that that's unlikely before this war ends. But I do think about the risk in this now third year whether or not Ukraine gets just enough support to continue fighting and resisting, but not sufficient enough to defeat Russia. And ultimately that's how it plays out. Do you have any idea or I don't know how you see maybe what happens here in this third year.
So I think in this third year the war will continue. Putin is waiting to see what happens in our elections. In November, and he's hoping that if President Trump is reelected that that then the US will cease supporting Ukraine and so it'll be over and Russia will win. And you know, I think that we, you know, we really need to think very carefully about what we're doing going
forward in terms of supporting Ukraine. And as it is, even if that sixty billion dollars does go to Ukraine, as you said, it will be enough for the Ukrainians to continue to push back, but not to win.
Ultimately. And I think about the nuclear ambitions we talked about a little bit earlier this week. I believe President Putin he denied it, that that was in his intentions. Do you think that that's potentially, in terms of Russia's nuclear ambitions, a real threat of something being put up in space against the United States and others.
I mean, it's possible. It's of course against the treaties that we have signed with the Visions and other countries too. I wouldn't put it past him. I think at the moment he wants us to believe that he might do it and to deter us from doing certain things. I mean, the main aim at the moment is just to spread fear both in Russia's neighbors and in the West about what Russia might do. But I think we have to watch this very carefully, and obviously our intelligence agencies are doing that.
Do you think that's working, that he's successively spreading fear about what Russia is doing and what Russia could do.
He certainly had succeeded in some European countries, in some of Russia's neighbors, and I think that people in the United States as well, who think, you know, we're so concerned about what Russia will do. We have to be careful.
And I think the White House has been deterred from sending some weapons to Ukraine which could hit really into the heart of Russia, because they do fear escalation, not necessarily the space escalation, but certainly escalation that could go to the potential use of a tactical nuclear weapon.
Angela thirty seconds left here. If President Putin and Russia succeed for a second time here in Ukraine, what's the next target? Because I would assume there will be another one, or is that wrong? And just quickly?
I think ultimately there's another one, but I think not immediately because clearly the Russian armed forces would have to, you know, regrow and refurbish themselves. It could be the Baltic States, one of the Baltic States which did used to be part of the Soviet Union, and that's what you know, who has lamented the collapse of the Soviet Union, or potentially Poland that's certainly what the polls think.
All right, kind of leave it there as always so much appreciation. Angela doctor Angela Stent joining us there in Washington, as we said, author of Putin's World, Russia against the West and with the Rest. She's a senior fellow at Brookings Institution, former National Intelligence officer for Russia and Eurasia at the National Intelligence Council. Just a great voice when it comes to what's going on and trying to figure out what's next.
It's just hard to believe that we're already going to be in your three So manytime.
We said, do you think it's another six months? Do we think it's another year? And here we are start the third year.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoon from two to five pm Eastern Listen on Applecarplay and and brout auto with a Bloomberg business app or wanting us live on YouTube.
Well, one of my most read stories on the Bloomberg today is about a Fidelity International money manager that dumped nearly all of his positions in US treasuries from friends he oversees. His expectations are that the world's biggest economy, the US economy, still has room to expand. Check it out. It's a great read on the Bloomberg terminal on at Bloomberg dot Com. It's just kind of one of the resets we continue to see.
Tim Yeah, on that reset. I want to bring in Maddi Destner, head of Global Asset Class Services at Capital Group. It's global investment and management organization manages more than two point five trillion dollars. Maddie joining us from Los Angeles right now. Maddie, good to have you with us. The reason you're on is because Capital Group is out with its twenty year Capital Markets Assumptions Report. It sets out some pretty clear expectations about where you all at Capitol
Group think the market is going. And when we say market, we're talking macroeconomics, equities, fixed income, and FX market performance over the next twenty years. Carol and I were talking about this. You do this, yeah, I mean, how clear is your crystal ball to be able to help us understand what US equity markets are going to do over the next twenty years and what emerging market equities are going to do over the next twenty years.
Well, it's a great question, Tim and Caryl, and thanks so much for having me on. When we think about the long term, you have to consider what is directional, what you know is about to occur, and then what you can assume for the long term. So, really, what our expectations are our inputs to ensure that our clients are set up for success for the long term, and our expectation as we look forward is that they are. Actually our broad expectation for a sixty to forty portfolio
is about six percent annualized over twenty years. And when we look through the asset classes, we've changed things a bit as we've seen action in the markets over the last couple of years. Actually brought down our equity assumptions just by a bit, about six point nine percent for US equities given the evaluation.
Change that we saw over the last year.
Not extreme, but our expectations are that valuations are a little less attractive, and then for a fixed income we've actually brought up our expectations. You're seeing some equity like returns out of fixed income sectors, particularly some of those extended sectors. So we really feel good about the puts in takes of the long term expectations and the fact that investors will be set up for success as long as they stay invested.
All right, what's how do you figure it out? Like we said, your crystal ball, But what are these assumptions based on. I'm always interesting in how do you make the sausage here in terms of investing? So what is it that these are based on in terms of kind of reducing your equity assumptions over the next twenty years, but maybe raising your fixed income assumptions.
Yeah, So we actually decompose the returns into building blocks. So as you start to pick apart the pieces, you can think about what will change in those building box.
So we think about economic.
Growth, what does that look like over the next twenty years, productivity, what happens to the labor force, inputs into demographics, how that picture will change over the next twenty years.
These are knowable things.
Our expectation of changing technology and the productivity of the workforce. We think that has a big impact on the expectations. And then of course currency, certainly for US based investors of international assets, both developed as well as emerging, our expectations for the dollar and other currencies, how that impact the supply demand dynamics and the balance of trade. And then of course the expectation of the change in share count.
There's been quite a lot of buybacks and that has changed the expectation for earnings for companies for individual shareholders. And then the last thing is yield, both on the fixed income and the equity side. Are expectation is that you're going to start to see healthier dividend yields, particularly in the international space, less so in the US, and that, as I said before, starting yield and fixed income are much higher.
So as we look at each of these building blocks, we sort of.
Build up the elements from the bottoms up perspective and then look top down and ask ourselves how realistic are these numbers?
Hey, Madie, I want to dig into the equities research that you and the team over a Capitol Group have done, because I was pretty surprised to see that over the next twenty years, you expect emerging market equities to outperform US equities pretty significantly given and that surprised me given the out performance we've seen from US equities over the last ten to fifteen years.
At this point, Yeah, our expectation is that there are both cyclical and secular changes going on in emerging markets. So if we just frankly look at the inflation picture within emerging markets, inflation accelerated early on. Central banks start to ease or tighten pretty quickly, and now they're in the path of easing policy, so they're a bit ahead of us in that cycle.
We expect to see an upturn. From that perspective.
There's certainly a benefit from a continued weakness of the dollar, which.
We expect to see over the long term.
And then one of the most important things about emerging markets is the change in supply chains that we expect to see over the long term. So we know that Chinese growth is slowing due to demographic impacts as well as less than friendly market reforms. But what's happening is companies are starting to remove their supply chain exposure to China and going to places like India, like Mexico, like Southeast Asia, so we really do expect a resumption of manufacturing centers in those areas.
And then the last thing I'll point to is.
That from an emerging markets perspective, the demographic picture, the age of the workforce looks a lot healthier than in some other areas of the world.
That makes a lot of sense. I'm also curious, you know, here we are coming off a week where we were all agog over Nvidia, right, its result, its outlook, its impact on the trade continues to play out today. You guys did look at as one of your key criteria the changing technology on workforce. Talk to us a little bit about what's the changing technology that you focused on and its impact.
Yeah, it's a number of things, Carol, It's not just one. If we think about the impact of you know, how productive is every single worker, if everybody was doing the same jobs that they did in nineteen fifty versus today, how much more can they build, how many more patients can they see, How long is the expectations for life
expectancy and how that's changing. So things like artificial intelligence and how that's helping us do our jobs, cloud computing and how that's helping us be more efficient, and even some of the innovations in healthcare, whether it's gene therapies or immunizations, these will impact our longevity and frankly, our
health as a nation and as a world society. So all of these things are incorporated together, from our perspective, significantly increase the productivity of each hour work from individuals. So it's a bit of a give back to the giveaway that we have from demographics, because we know that this is an aging nation for aging all over the world, and that will impact.
We talked about that a lot here on the program, Matt It We only have thirty seconds left, but we got to talk politics and how you factor politics into your analysis here, not just here in the US, but around the world. Just thirty seconds left.
Yeah, exogynous factors hard to incorporate into the actual analysis, so we really do try to look through that and think long term.
From our perspective.
Though, as we look at the last twenty three election cycles, what we notice is that markets trend up on average every single time. There's lots of volatility around the primary environment. But once we have regardless of who sits in the administrative chairs, we tend to see upmarkets in that election cycle more so than a non election year.
So we're pretty constructive.
All right, Really appreciate this and look forward. Hopefully we can get you back real soon. Mattie Destner, she's head of Global Asset class Services over at Capital Group, a global investment management group managing more than two and a half Truly and Matty of course joining us from Los Angeles.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, just say Alexa playing Bloomberg eleven thirty.
All right, Well, the US Bitcoin ETFs that debuted back on January eleventh and the Grayscale Bitcoin Trust that converted into an ETF that same day have as of Tuesday, brought in about a net five billion dollars of investment. Your inflows so far, so money coming in, tim.
Yeah, that's real money. The anticipation and roll out of the products, by the way, stoking a doubling in bitcoin's price over the past twelve months. For more on the Space and the opportunities that he sees. Let's bring in Dave Donnelley, managing director at Spider Rock Advisors. It's a Chicago based asset management firm that specializes in, in their own words, providing customized option overlay strategies to investors. By the way, they've got about four point five billion dollars
in assets under management. Dave, good to have you with us for a weekly crypto segment this afternoon. You don't have a spot bitcoin ETF. Rather, you were going to introduce an option's overlay strategy on the ETF. Explain what exactly this is for people who aren't familiar with the strategy and what that gives for clients.
Sure, thanks for having me. Really a couple thoughts here. You know, you've got, as you just stated, billions of dollars in inflows into these ETFs. We're not an ETF manufacturer. Instead, we're an advisor who tries to help intermediaries and clients hedge the existing positions that they have. So, you know, while you've got five or so billion dollars in these ETFs already, you've got a trillion dollars worth of bitcoin out there owned in the more traditional way, you know,
with hot wallets and cold storage. You know, we think these ETFs make it so much easier for normal investors to access these these products and get something to track the price of bitcoin. But here's the benefit. They can now hold it in a securities account, and at some point very soon, these ETFs are going to have listed options on them, which allows us to do our work. You know, whether it's single stock positions or indexes or
now spot bitcoin ETFs. Our focus is helping folks hedge those existing positions in their brokerage account in an advisory account, helping to manage the risk in a customized way. Options on bitcoin ETFs are going to be the gateway to doing that. Interestingly, not only on the ETFs that people own, but there are ways to do it on the bitcoin they own elsewhere and do that from their securities account.
Got to say, Dave, what are the things we love to ask? It's a simple question, why are you doing this? And we're just curious if your clients and the investors are the clients that you guys help have been asking for something like this.
Everything we do is really driven by client demand. We hold ourselves out to be able to do our best to help clients hedge, you know, whatever they own in the public security space. So we've gotten a lot of asks about this over the years and haven't been able to do anything. Obviously, trading bitcoin or unlisted bitcoin options isn't something that's readily available in your brokerage or advisory account.
So the proliferation of these spot ETFs, and you know, we've been in contact with CEBO who's working with regulators to get the options on those spot ETFs available, that is really that's new, and that is going to open the door to being able to help folks hedge. Obviously a highly volatile instrument. Some folks enjoy that for training. A lot of people just made a lot of money in it, and just like you'd want to hedge anything where you had significant gains but don't necessarily want to
sell and pay taxes on it. That's where our business comes in to help folks hedge and we're really excited to be able to do that with relation to bitcoin.
Now, when do you think you'll be able to actually do that? Like, what's the ETA.
Last night I heard is that there's some regulatory going on in mid March, so it could be by the end of Q one, but we're basically just waiting to get those options listed, make sure that there's enough liquidity available, and we'll be ready to go to work.
I just want to say, when it comes to regulators and cryptocurrency, specifically bitcoin, it's been a waiting game, Dave, So are you real is that? Are you being realistic? Do you think in those expectations.
Unequivocally it has been a waiting game. I think, you know, the decision that was made to allow the spot bitcoin ETF was sort of the biggest decision that had to be made. I have heard nothing from the exchanges we're speaking with that make it sound like it's going to be anywhere near as protracted the time period for the options as that was.
So I am also curious how the strategy is actually going to work and in terms of mitigating the volatility that we have seen with the spot you know, spot bitcoin over the last couple of years. So how does it work specifically?
Sure, I think the most sort of typical approach to reducing risk for a client is just simply a costless collar. In this strategy, pretty straightforward. We want to buy protection, buy insurance against the decline in the price. So we're buying a put option on that spot bitcoin ETF. That put is probably going to be reasonably expensive, especially given the ball in bitcoin, and therefore we need to pay for it somehow. We don't typically advise folks paying for
it with cash. Rather, we'd rather pay for it with sort of foregone potential upside, and that's by selling a call. So your caller is buy a put, sell a call, and do that in a way that is sort of slightly net positive from a cash flow perspective. You can take up to seventy percent of your risk off the table without selling any and so that's that's a move we do for a lot of folks with concentrated stock positions today. We don't view bitcoin ETFs any differently.
What would you anticipate in terms of kind of a typical return then off of this kind of investment, because obviously, for those who are looking to play the swings, they're not going to have that advantage to the upside, but they're also going to be immune from most of the downside as well in terms of the swing the swings that we see on spot bitcoin. So what kind of returns are you thinking about off of this strategy.
I'd really redirect that to thinking about what kind of volatility reduction are we going to see? And again that's typically taken up to seventy percent off. For the tactical folks who enjoy trading it, it is a tool you can use to mitigate risk for a time period without selling, and then take it off to sort of re establish
your overall position and participate in the upside. But for other folks where it's just it's been such a long term winner for them, this might just be a way to take chips off the table without having to pay taxes.
All right, I get it, because when you said you've got kind of a high fee on it, I was just trying to kind of figure out in terms of what we could expect in terms of returns off of it.
Hey, Dave, I want to take a step back and just talk a little bit about Spider Rock Advisors, because on your website you do say that derivatives have a place in almost all portfolios with volatility as an asset
class serving as a core holding. I'll be honest, it's not something that we talk about a lot when it comes to an individual's portfolio, but talk and I don't think a lot of people have derivatives apart from you know, ETFs in their portfolios, So why do you think derivatives have a place in everyone's portfolio?
Especially for the taxable investor. Listed options can help in a number of ways. It's really the only way to change your risk profile without having to sell your existing underlying holdings, which of course triggers a tax bill permanent drag on performance. So reshaping risk, whether it's through too much risk and single names that you've owned that have had great rallies a few stories on those even this week, to just lowering your overall beta exposure, to creating additional
cash flows through call selling or put selling. There are all kinds of different tools you've got available with the listed option market with respect to a typical wealth management portfolio, stocks, bonds, funds, and through our technology and our business, you know, our goal is to bring a lot of customization to that and help folks achieve the changes they want to make in their portfolio using options, because they're the only way
you can deliver some of these solutions. Maximizing after tax is the real goal.
It's an important aspect certainly of this strategy. Hey, Dan, Dave, excuse me, thank you so much, really appreciate it, Dave Donnelly. He's managing director at Spider Rock Advisors, as we said, at Chicago based asset management firm, and they've got about four and a half billion dollars in assets under management. But this makes sense, like coming off of the spot bitcoin etf that we've seen approve, like everybody's trying to figure out the strategies off of it, and you know,
minimizing volatility through options obviously makes a lot of sense. Yeah, or it's going to be, certainly something that we knew was coming.
I have to wait for those regulators to give the nod of approval.
Yeah, absolutely, not yet, but you would assume that, right, they're going to allow for kind of an expansion of some of these trading strategies.
A brother mark a.
Journal.
How about you let me drive?
No, no, no, no, honey, please, I'll do the driving gravels. Excuse mate, I want to drive.
It's a good question time.
This is the drive to the globe.
Music well Don on Bloomberg Radio, TikTok, everybody eighteen well, yeah, eighteen minutes left trading session. Hell, I'm not a good rounder. We're definitely off our best levels of the session. As you heard Charlie break it downs like Gaines on the S and P and down Nazac lower. I feel like a little bit of a break a pause, if you will, from the n video rally that was yesterday. But S and P what we're still at a record right, doesn't matter what.
I've just got to be in the green and Carol, we're in the green right now five points exactly. Hey, let's see what Katerina Simonetti has to say about this. She's senior vice president and private wealth advisor at Morgan Stanley Private Wealth Management. She joins us on Zoom from Philadelphia. Katerina, how are you?
Thank you for having me on the show. It's good, good to be here on the Friday.
It's good to have you back with us. What a week it was. Help us make sense of the game that we've seen in the S and P five hundred so far this year, in the now so far this year, when you know we're talking already up six point six percent in the Nasdaq, six point eight percent in the S and P five hundred. Uh, what's left for the year?
Well, what an incredible start of the year, and when you kind of think about the transition that we finished twenty twenty three with this focus on what FED is going to do, and then we went into January with this wide expectation that we're going to have, you know, five raid cuts, and what we're seeing now are these earning surprises. And they're not just surprises across the board.
There are surprises specifically in the names. The magnificent seven names that you know have done so well, you know, so now it's going to be progressively difficult for the FED to be very aggressive with rate cuts, and consensus now is that we're going to have about three of them, and the focus for investors is really on these fast
moving stocks. And what we're seeing as the biggest trap to try to avoid is when investors are starting to doubt their diversified portfolios, starting to dow to acid allocation and are kind of saying like, should we stay with blue chip stocks, should we stay diversified, or should we switch direction into this highest growing stocks, And that's what you know, these are the type of conversations that we're having, you know, the beginning of this year.
Well, having said that we kicked off earlier with our Gina Martin Adams, our chief eculty strategist to here at Bloomberg Intelligence, and she said, you know, with all of the interest and mania surrounding Nvidia and our obsession with technology, that she said more stocks in industrials and financials made more highs than tech over I think she said the past week or so, which was kind of interesting, and that's why she said she was finding it constructive for
investors to look specifically at those spaces. How are you seeing it? Could you drill down a little bit more specifically in terms of where you think not just a broadening out where investors should be maybe adding some more in terms of acid allocation.
Absolutely, and I want to be clear that we are not advocating giving off on tech because tech is playing an absolutely instrumental role in the growth of the sectors like industrials and financials and healthcare. And we're seeing some of these companies all across the sectors, you know, making significant investments in AI, in increasing profitability, in cutting costs, and technology is going to play and absolutely essential role there.
So technology should be in the portfolios, but we're seeing the other sectors, sectors like financials industrials with this huge government spending in that space. With health care, you know, we have agent population and the need for healthcare services is becoming more and more, and they are exciting developments with genomics and biotech. So we see the opportunities across
the board. We're advocating looking at valuations. What we are cautioning investors not to do is when we are looking at earnings, and especially their earnings that are so exciting and are looking very good. You know, the question is how sustainable are there? Are they? And there's no such thing as growth and perpetuity right like, so the reason that we diversity.
Yet and yet don't you feel like constantly there's a pushback against the Magnificent seven, those growth names, and yet here we are year after year focusing on them and talking about them, and they continue to lead the market gains.
Absolutely, So I think the real question we should be asking is what should we do about it? And investors that don't own those names and really want to own them, there is no you know, we're not telling them don't
own them. The question is how much what we are cautioning them from is abandoning healthcare and financials and industrial health instead of just going and focusing and concentrating in these individual names, but taking a reasonable position because you want to be part of that AI story and want to be part of that growth, and you don't want to feel like you're missing out. That's perfectly acceptable, that makes sense.
So I guess the question I have is really about the macro environment and it does, you know, politics, notwithstanding here in the election, notwithstanding here in the US, what kind of derails the path that we're on right now, because it does seem like so many economic signs that we're getting, so much the data, it's seemed pretty good.
Absolutely, and I think that tim the economic data that we need to look at more than any other area is labor market because the data that we're seeing from the labor market is extremely mixed. On one side, we have full employment, we're seeing high wages, but we're also seeing this waves of layoffs or you know, the cost
cutting projections that include the possibility of the layoffs. And as of right now, you know, the consumer confidence and willingness of consumers to spend and their optimism about the market is something that is playing a very big role.
It's this huge headwid I'm sorry the tailwind, you know, for the growth of the economy, but if we're going to start seeing this shift and the change in the labor market, that is something that is going to be pretty pivotal, you know, with the slow down of the economy, and something that FED is playing a very close attention to when it comes to the decision on the timing with amount of bread cuts.
Carol, this is exactly what Gina Martin Adams said earlier today. Watch the labor market totally. It just doesn't seem like we're getting any signals that there's weakness there except for and this is kind of ironic, the tech industry layoffs that we've seen over the past six weeks.
And she said, if we do start to see overall the labor markets start to roll over and that the FED does feel like it needs to cut rates sooner rather than later, I mean that could be problematic that the economy is slowing down and that ultimately will lead to slower earnings growth. Like it all relates back, and then you have to start rethinking about valueations on the
equity side of things. Potentially, potentially, potentially, all right, Katerina Simonetti, She's Senior vice president and private wealth Advisor at Morgan Stanley Private Wealth Management, joining us from Philadelphia.
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