Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Interesting story right through about history being on the side of stock and bond balls as FED officials kicked off that two day policy meeting. Today, equities and bonds have posted weekly gains amid six of the eight FED meetings over the past year. This according to an analysis team by City Group.
And yet the devil always in the details with the key points to focus on in tomorrow's FED decision. Back with us, we have Steven Skanke, chief economic advisor at the Wealth Advisor kill Point. Steve also a former US Treasury in White House National Security Council staff member serving during the Nixon, Ford, Carter, and Reagan administration. Steve joins us from Washington, DC. Also here in the studio Bloomberg Economics US economist Stuart Paul Stewart. Good to have you
here in the studio with us. I do want to start with you because the FED is not expected to make any move tomorrow, but we do are a lot of investors that I should say expect to hear signals of perhaps a move come September. How do they thread that needle where they say, Okay, we're not going to do anything in July. Maybe we're not gonna do anything. You know, we're not gonna do anything until September. How do you do that?
There are a few different ways that they could sort of gently modify the FMC statement, the formal statement that comes out, For example, in the opening paragraph, there's a line in recent months there has been modest for the progress there's a committee two percent inflation target. Just stripping out the word modest, just there's been further progress would be one of those little gentle.
Signs we said the devil was in the details. One word, that's right.
They could be a bit more bold and say things that if the data evolves as the committee expects, it will soon be appropriate to begin cutting rates. That would be a much bolder, clearer call for illuming rate cut in September.
All right, I want to bring in Steve and I'm just pulling it up on the Bloomberg. So September eighteenth is a long way off I think about, you know, Steve, We've made progress, a lot of progress in the past year. When it comes to inflation, it seems to be settling down consistently. We continue to see US economic growth. That's a good thing. We got some data today consumer confidence rising on an improved outlook for the economy, job openings
beating forecast. It's this delicate balance. If you were still advising the White House, what would you be telling them about tomorrow's FED decision?
Whether they just need to be patient and not seem anxious and not jump the gun on it. The Fed
is navigating this very carefully and really very doubtfully. You know, a week or so ago, the FED Chair, the New York Fed Bank President, we're all talking about the you know, the concern about what was happening in labor markets, and are really signaling they're eager to start cutting rates, but they really need to see good inflation numbers and then lo and behold, they get a reprieve because we get better than disinflation numbers with the PCE flator down at
two and a half percent for the last year, and then better expected than expected second quarter economic growth at two point eight percent annualized, even though when you dig into it it's not quite as good as it looks, but kind of is slowing, but not in the tank. Inflation is coming down, and even the hard to squeeze housing or shelter component of the CPI and PCE to
flator has started to give up. But you know, it had been trending at six and a half to seven percent inflation and now it's at four.
So, Steve, would you be telling, if you were advising the White House right now, say hey, listen, guys, go take that vacation. We got plenty of time. Just cut to the chases. Would you say that?
I certainly would say that because anything that they could say, Carol, is not going to be helpful to the FED doing what it really wants to do, and that is cutting rates in September. Now they can applaud positive economic growth, they can applaud in plation coming down. But I would tell the folks in the White House to say absolutely nothing about the FED meeting and what the FED is doing.
They're independent, of course, Carol, Remember the Fed. The FED is politically in the parent You've heard Stuart. Economic data that you have an eye on at Bloomberry Economics as US economist, Where are you starting to see concerns? Do you think the Fed is acting too slowly on these concerns.
I don't, So you might want to rewind the clock a little bit and think back to Q four of twenty twenty three when the inflation data were so good and everybody was expecting a rate cut to come in March. And so things can change pretty quickly.
We have had a little sibling and you psych them and you pull something away or like, you know, the right psych that happening.
Speaking from experience, Carol, Yeah, there's a lot of siblings.
Yeah.
The data in the economic landscape can change relatively quickly, and where we've seen the most change so far has been in the loosening of the labor market. It was just in the June Summary of Economic Projections that the FED is expecting to end the year with four point one percent unemployment and we're already there, and I think that odds are favoring us triggering the PSALM rule that real time recession indicator in August.
Remind us what that rule is.
So if the three month moving average of the unemployment rate exceeds the twelve month minimum by more than fifty bases points by half a percentage point, it's typically a good indicator that a recession has already begun, that you're
in the early innings of a recession. So we're expecting, not only are we expecting to not end the year at four point one percent unemployment, which is where we are and which is where the FED expects to end the year, we think that we're going to trigger or that real time recession indicator before the September meeting, which would warrant that cut in September.
Is there a chance it's triggered on Friday?
Very low probability that is triggered on Friday. We basically need to get a move to four point two and a half, right, So four point twenty five percent unemployment, so a bit out of range. Consensus is expecting four point one percent unemployment rate. We think that it's more likely going to be the case that it's going to be triggered in the August job report, which comes just a few days before the September meeting.
Well, I kept saying, I kept thinking, you know, we had that inverted yield curve for so long. I mean, do we get off Scott's free you know that we don't ultimately get a recession. I mean, Steve Skanke, if we get a recession, is it touch and go because we have enough growth or could it be something more dramatic and problematic.
Well, the thing about it, Carol, that's a very good question is is that these things are never linear. It's not that it just sort of eases into recession. Something triggers that and pushes it, And most likely it would be mild, just given everything else that's going on in the economy. But it isn't necessarily a mild recession. And so the Fed treads very carefully. And as Stewart said, this so rule. It's a statistical observation. It's not a
syllogistic argument as to why it happens. But it has a good enough statistical basis that we really need to be careful about that and watch for it. The other thing is, and I agree with Stewart, it's very unlikely that we would see unemployment trigger up to what would be needed to trigger the Son rule. But the household survey has been so quirky since since COVID and the shutdown of the economy that and it digresses so much from the employer survey that we could actually end up
with something. It pushes unemployment to four point two or four point two and a half. Yeah, and then we've we've got this phenomenon of well what does it mean? And of course markets would go crazy. Will they try to figure that out?
Got it?
Stuart?
Ten seconds, One hundred and seventy five thousand is the number that economists are expecting with the jobs report on Friday.
Does it come in above or below that?
We're a smidge above, but we see the downside risk to one seventy five. The effects of Hurricane Beryl are likely showing up in the data. We've already seen it effect the unemployment insurance claims data just two weeks ago in Texas.
All right, there we go, so ten seconds, he did it.
Love when people listen. Thank you so much, Jeeves Skanky, chief economic advisor at keel Point, and of course our own Steward Paul Blueberg Economics US economists.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple card Play, and then brought auto with a Bloomberg Business app, or watch just Live on YouTube.
And much.
President Kamala Harris is kicking off a push to compete against the Republican Donald Trump in a wider swath of battleground states with a rally today in Atlanta. Harris's event in George's largest city is her first major effort to put a larger group of states back into place since launching her campaign back on July twenty first.
Meantime, the presidential race is on the money race that is among our most read on the Bloomberg terminal today is an exclusive about hedge fund billionaire Ken Griffin, who's spending tens of millions of dollars to back Republican primary candidates across the US. The story reported by Bloomberg News national reporter Mike Smith and Bill Allison. Bloomberg News campaign finance reporter Mike joins us from Miami. Bill in our
DC bureau. Mike, I do want to start with you, how would you characterize the type of candidate that Griffin is giving to right now? Because there's a lot of nuance here.
Yeah, there is a lot of nuance and it's not entirely clear exactly what he's looking for, but in general, it's sort of old school, pro business, conservative values that he is backing. For example, sample national defense, and one of the main things his promoting is sort of helping the American dream, which is obviously a very broad description, but that's how he describes him.
Does that backing Mike include Donald Trump at this point.
Well, so far, No, as far as we can see in the most recent filings in terms of money, he's yet to give money to Donald Trump. He hasn't ever given money to Donald Trump that we know of, and he's quite guarded in saying whether he's going to back Trump or not. He's certainly a Republican. He gives to Republican causes and candidates, but Trump has yet to be seen.
So Bill, let's go through the money. What do we know about Ken Griffin and his donations to the GOP going back the last decade or so, what has he typically supported, how much has he given up and where does it go? And what is he doing today?
Really since twenty sixteenocused on Congress, both the Senate and the House, he's given I think two hundred and forty eight million dollars since twenty fifteen, which is an office a lot of money, about a quarter billion dollars, and he's focused largely on super packs that again elect members of Congress. And in the last couple of cycles, he's really looked at early money and having an influence on primaries, like who gets chosen to be to get elected to Congress,
you know, like you'll look at safe Republican districts. He'll put a lot of money in behind what he used as a superior candidate and try to get that person into Congress. And so far this cycle, he's spent more than seventy five million dollars into political committees at the federal level.
Mike, how successful has he been over the last decade, because it seems like he hasn't always bet on the right horse, so to speak. He supported the opponent to JD. Vance and is a Ohio Senate race that JD Vance ended up who Jdvans ended up beating. He's thinking about supporting somebody who could challenge Matt Gates. He has supported Nicky Haley in the past, Kevin McCarthy in the past as well. How successful has he been?
Yeah, I mean, that's an illusive thing to answer, but we can say that this this year, this this cycle, he's gotten behind sixty different candidates in congressional races and he's you know, they've they've won about two thirds of those or a little bit more. So it's not a bad record. He has won a lot, but he's also lost some And a lot of his money has gone into losing races and a lot has gone into winning races.
You know, And I do wonder too, Bill, You know, we often kid, but it's it's very true. Money talks, right, and money gets attention. How influential has he been really in kind of shaping what's going on in the Republican Party? We talked so much about it being, you know, Donald Trump's party right now, but how much has he really been influential over the GOP overall?
Well, the Republican operatives that we talk to, the people who run super packs, the people who recruit candidates, the people who really kind of do that nuts and bolts work of running the party say that, you know, he's fundamental to their success. He's he's very influential. He's very important. Uh, if you have an idea for a super pack, you want to elect veterans, you want to elect uh, women with business experience. There's a whole broad range of folks
who do different kinds of superpacks. He's somebody who's definitely gonna be on your list to try to get, you know, to at least to his advisors to make your pitch to say, this is what my plan is, this is what I'd like to do. And you know, if he decides to fund you, you have a good chance of of you know, also drawing money from other donors.
Bill, somebody might read a story like this and and come away with a really cynical view that, you know, politicians can be I'm not gonna say they can be bought, but certainly people with power are able to donate a lot of money, uh, to super packs that go around
traditional campaign finance. Just give some context as to how something like this is is legal and how super PACs are able to operate in this world when certain individuals are only allowed to give a small, a relatively small amount of money to individual candidates.
Boy, there's you know, there's a famous saying in politics that you know, there are three important things in politics money and I forget what the other two are. And this is this has been kind of consistent throughout history. Super PACs are legal because of basically the First Amendment. The Supreme Court held that you know, if you're if you're speaking independently, i e. Not donating to donating to a politician, but donating to a group that tries to
elect politicians at that's First Amendment protected activity. And that something called the Citizens United Case gave us these these creatures or these super PACs, and you know, you know, it's it is fairly you know, it is fairly important in US politics that you know, you be able to have you know, there's there's three different kinds of owns. There's small dollar donors which are very important, but you need millions and millions of them to add up to
you know, a lot of money. And then you have a handful of people there's the folks in the middle, and you have the handful of people at the top who can with one check, you know, fund you know, a huge, huge advise. You know, we've seen already in this campaign an investor named Timothy Mellon who put fifty
million dollars into a super pack backing Donald Trump. I mean it's we've had, you know, we've done stories that Elon Musk is thinking of putting forty five million dollars into a super pack each month to help Donald Trump with his ground game. So obviously it's hugely important and it's perfectly legal.
You know, Mike, I think about Ken Griffin, right, he's been in Florida, what now, maybe a couple of years or it's been a couple of years since he announced moving down there, has become very influential, certainly on the state. But I do think about as you guys are laying out the causes that are of importance to him. He doesn't necessarily buy into the polism, does he that Donald Trump seems to espouse along with JD.
Van's.
Yeah, I think that's a good way to put it. He stresses that, and the people that are close to him stressed that what he's looking for is candidates we're conservative, Republican, but also candidates that can govern governance. He likes to use that word a lot in a lot of things that he does in terms of giving and I think he, you know, he strives, or he says he strives to apply that to the candidates and the politicians that he
decides to back. And he's quite loyal. You know, he will stick with a politician that he believes in or feels like is worth backing through wins and through losses. And that seems to be a key driver what he does. He wants leaders in Congress, especially who will actually get things done, who will legislate the kind of things he wants Congress to do that he supports, and he shies away from backing candidates that are are less effective in governing, as he.
Likes to call it.
Mike, what do we know about Citadel Public Affairs head case and Carter?
Well, he's, uh, he's he's he's very key to this process. Uh, he wouldn't talk to us for this story, but he u is plays a pivotal role in helping Ken Griffin decide where where to put his money, not just in political giving, but also in philanthropy for example. So he's a pivotal, uh sort of advisor in.
That realm Hey, Bill, when you look at the money, uh, that's been drummed up in this race so far, I think about, you know, Kamala Harris, the money that she's raised since she has essentially taken over the mantle from from Joe Biden. I think about We just talked about Elon Moss. We're talking about Bill Griffin, Pill Griffin, Ken Griffin. It's a lot of money. I'm just curious, is this turning out to be one of the more expensive of campaigns or rases.
It's like it's going to be. I mean, it's you know, every presidential record sort of sets a record. Presidential election sets a record because you know, contribution limits go up, things get more expensive. Super packs are you know, play a bigger role. You know, there was some thought that maybe the twenty twenty election because of COVID, whether it be less spending. It turned out there was more spending
than ever. So I think we'll see more spending. And it's in part because, you know, as Ken Griffin said or told us in the article, it's you know, there's a lot at stake in this election. It's an important time for the country, and you know kind of you know, you know, all the money is coming out.
Bill just twenty seconds left. Any whispers of campaign finance reform around the halls of Washington, DC these days.
It's you know, there are people who still plug away at it. It is not really a priority for Congress or this administration. And it hasn't been for years and years. I mean, the closest thing we have is some bills to disclose dark money, but you know they get stuck in the senator of the House and don't really go anywhere.
All Right, Well, if you weren't depressed enough, we're going to have some talk of climate change coming up in just a moment to keep the mood going. Bloomberg News National Reporter Mike Smith and Bill Allison, Bloomberg News Campaign Finance Reporter. This is a Bloomberg exclusive and among our most read on the Bloomberg terminal.
You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern down Applecar Play and Android Auto with the Bloomberg Business Ad. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
Well, rural students lagged behind the rest of the country in college attendance, and one of the world's top bankers is spending a lot of money to address that. Byron Trott, who grew up in a small Missouri town and became one of the world's top Bankers will spend one hundred and fifty million dollars over ten years to help more the colleges and public universities recruit ural students.
That's right, Tim. The new donation builds on a twenty million dollar initiative his family foundation started last year with schools such as Yale, Ohio State, and the University of Chicago, his alma mater. Bloomberg News Higher education finance reporter Janet Lauren writing about this in recent days, She joins us now here in our Bloomberg Interactive Broker studio. Also with us is Jim Nondorf. He's Dean of college Admissions at the University of Chicago, along with Margie Bettley, who is
Deputy Director of Admissions at the University of Chicago. They both join us from that city, and Jenna, I want to start with you because Byron Trott is somebody we used to talk about. I feel like a lot well known in the financial industry, although maybe not as of late. Tell us little bit more about him and what he's done well.
Byron Trott grew up in a very small town in Missouri, and it really wasn't the kind of place that got visits from admissions officers like Yale or MIT or the University of Chicago, and he became extremely successful. He went to Chicago for college and earned an MBA there and started a very long career with Goldman Sachs, where he earned the title of Warren Buffett's favorite banker, and good title.
He went out, and you know, he's been an investor and runs his own merchant bank, paired with Michael Dell's investments,
and has been become extremely successful. And had a conversation with Jim Nondorf asking about rural students of the University of Chicago, and that led to an effort to recruit more students there, and then it led to a bigger effort to recruit students from additional colleges, as we've mentioned, sixteen schools, and now he's doubling that and putting one hundred and fifty million for recruiting efforts, but also to help students in high school sort of understand what college is.
And you know, it's not just the college just explaining them what is college, how to get there, and it's a lot of public universities as well.
All right, Jim, come on in on this. Thank you both for being with us. What did that mean? What does this money mean for you guys?
So really, and I do want to correct Margie. In addition to being an outstanding admissions officer for U Chicago, she is actually the executive director for Stars. So she really puts it all together and works with all of the other colleges and universities. She's much more important than
me in many ways. So but I will tell you what it means for us is, you know, rural areas, small towns, sometimes they're easy to overlook it, they're harder to get to, they're harder to engage, and quite often it will be you know, there won't be anybody who's ever gone to U Chicago or Yale or or wherever, and so they don't have easy access to role models that are going to inspire them and say hey, I welcome there. And so what what these funds do is they enable all of us to both have someone on
our teams. In our case, I have a a TRUP rural director who focuses on engaging our other admissions officers to make sure we cover small town and rural school high schools, but also that you know that we can do programming bring them to our campus at U Chicago. Prior to launching Stars, Iron had supported a program called Emerging Rural Leaders, which Margie ran, and it brought students
from all around the country. And what is wonderful as those students then go back and they are a proof points to all the other students in their high schools right that they're welcome in ours.
So tell us a little bit about the efforts. You know, how we know how difficult it is to get to rural towns just as one person, but going with a group and sort of doing an admissions tour of Tennessee. We wrote about that last here. What does it mean to have, you know, so many schools reaching out to so many different towns, And tell us a little bit about the efforts class fall, Margie, come on.
In on that.
Yeah, so I'll give you a framework and then maybe Margie'll take the details. But the framework is really sometimes it's wonderful to have multiple schools so that students get a sense of the breadth and depth of higher education and that there are schools who have four percented mid rates and eighty percent A mid rates and there's a lot of amazing places to go. It also allows us to kind of divide and conquer where maybe we can't.
As you, Chicago, go see every more schools. If we divide them up amongst thirty two schools, we can see thirty two times more schools and represents all thirty two schools just by one one admissions officer visiting that school. So it really it's about leverage and expanding the impact that we can make individually when we do it all together. But Margie has gone on these, she's led them, she's put them together. I'll leave it to Margie to tell you a little more.
Yeah, I think Jim is exactly correct. We can do exponentially more as a network than we could do as one highly selective institution. The need is huge, and as one school we can only impact a very small number of students, whereas as a network of schools we can
impact thousands of students. It's a massive difference. So I would day any given year the University Chicago, even though we had Rural as an initiative, we were only visiting maybe a couple dozen rural high schools during our recruitment time, whereas this past year as a network for Stars, we visited over eleven hundred high schools. Another example that I have is that with these trips where we go to students, many times it is their first opportunity to meet with
multiple admissions counselors. I have a group of students that I work with over this summer through Emerging World Leaders. Out of that group of sixty students, almost every time when I ask how many of you have had more than five colleges and universities visit your high school, only
two hands went up this year. In one swing with a group, we can more admissions counselors, more different kinds of schools, more information, and more options to these students in one fell swoop than they're ever going to see in an entire year.
So it is.
Exponential what we can do as a group that we couldn't do alone.
So both of you came from small towns to study at the University of Chicago. So once you've recruited students and told them about college, it's another thing to sell them to be able to go to a place like the University of Chicago or MIT, or even you know, a large state flagship. Can you tell them, explain what you're telling them about coming to college and in the big difference coming going to a local community college versus a four year college that can give them opportunities and
really also help their family. Margie, why don't you start perfect?
Yeah, Having gone through that kind of experience of never having taken public transportation before in my life, never are really needing to navigate something as large as the city of Chicago. Coming from a smaller town in Georgia, it was a huge transition, and there are lots of transitions that students are going to go through. It's going to be academic, social, So we want to meet them at every stage, and we want to meet them where they are.
I think support systems are something every single member school has focused a lot of time on this past year. Jim mentioned at the very beginning that part of these funds go towards finding a point person on each team in each of these universities. That person is a face for students to ask questions. We are there for them not only admissions process, but we build those relationships all the way through to when they're students on our campuses.
For example, I host quarterly socials for our rural and small town students on campus. I'm available for one on ones, I act a little bit as a social advisor to help them make some of those transitions. So we are thinking about academic social care. We are financial all those different really important support systems. One other thing that I'll point to the University Chicago of being a really good
example of this is that financial support. So we offer amazing financial support in general for all of our students. But when we started these efforts and working with rural students, we really pinpointed one important thing, which were family farms. That was a big barrier for students because we were counting them as assets in their financial aid applications. Well, not fair to ask a students to go sell their home family farm in order to attend college. So we
took that out. We changed our financial aid policies to be more welcoming and to be more accessible for rural and small fown students.
Hey just got about forty seconds here. I am curious, Jim, were you guys not recruiting from rural areas beforehand? And again just got about thirty forty seconds.
Sure, So, to be very honest, wasn't something we tracked so that that we didn't do it? I'm sure we visited some schools. But when Byron first approached me about this, he asked how many ural students we had in a class, and I didn't even know the answer, and it was a small number. It was about thirteen. And now there are ten percent of our class. And you actually have to identify and make it a priority. And that's what Stars does for all of our schools, and that's what
Byron support has. Really it's radically changed the composition of our incombing class well.
And it certainly fits with this idea, right that we say, you know, there needs to be diversity of all kinds when it comes to academia, right, that's part of the experience. So really interesting stuff. Listen, Thank you both so appreciated. Our thanks to Jim Nondorf. He's Deena College Admissions at the University of Chicago and Margie Bettley, Deputy Director of Admissions at the University of Chicago. But really instrumental she is in terms of this program. And of course Jennet
Lauren for bringing this story to our attention. She's our Bloomberg News higher Education Finance Repur. So much going on when it comes to higher education.
Mu.
The journal.
How about you let me drive Oh no.
No, no, no, who's going to drive?
Honey?
Please, I'll do the gravel.
Let's wat I want to try it. It's a good question.
This is the drive to the clothes, Tim think we'll buy around? Should it on on Blueberg Radio?
Oh? If people just knew how you sang to the themes, you can't do it.
We don't have the rights to the music, so I can't sing it. Maybe we can. You do it well than you can't.
You do like it for three seconds or something.
I'm not allowed to.
I don't know something like that.
What we are allowed to do, though, is talk about the markets bouncing around here. We're off our highs and lows of the session, down on the S and P and the Nasdaq one hund you just heard Charlie breaking it down. We are up on the Dow Jones industrial averages. We get ready for a big drop of earnings after the closing bell. So curious to see what Walker Williams has to say about it all. He's chief market strategist of private wealth at the wealth advisory firm Lido Advisors.
They have twenty billion in assets under management and enjoins us from Vail, Colorado.
How are you.
I'm doing well. How about you guys this afternoon doing okay?
Doing okay? How are you doing?
Tim good? I kind of wish I was in Veil. I was going to say that, you know, it's the worst place.
It's them.
It's okay, do some mountain biking.
Are people worried about, you know, politics and climate change and geopolitics and growing US debt in Veil.
More so than you think? I think, you know, when we're looking at the worries in Veil or New York or wherever they're they're kind of very much similar politics. I'd always put at the top of the list. We can change the players, but we frankly get questions about what does this implification mean for growth, especially for taxes, for structuring, for things of that nature. You know, talking
about climate change. I think that's uniquely interesting topic because when we discuss climate change, it's not just you know the idea of hey, what's going on with storms? You know, we've done a lot of work on what does that mean for property and casualty insurance companies? You know, you
see this right now. There's been actually a couple of deals that we've seen where insurability has been a you know, an issue that couldn't get past the finish line, especially if you're buying properties or investing in properties in certain parts of this country. You know LEDO, we're headquartered out
of California. You know the risk of wildfires and what that means from transactions or simply like, hey, can I get home owner's insurance in separate areas of the state is something you really have to dig into and consider.
So, Walker, just to help us understand your role at LEEDO, are you focused on the Colorado area? Geographically focused on the greater Denver area Edwards Veil.
Sort of that that area?
No, so like my role as a national role is the chief market strategist for the firm. I do live in as you mentioned Vail, Colorado, So from that's.
A good at place to be chief market strategy you travel.
Yeah, ok, yes, so I am based here, but my role is really a national role where I spend most of my time thinking about strategies and trends that are affecting the markets in various aspects.
Fortunately, the Eagle Airport is not too far away and you can you can do that, all right, So let's talk a little bit about what you're seeing when it comes to the markets. Because one thing that we've been talking a lot about today and also in recent weeks is this idea of a rotation out of large caps, especially today with the tech megacaps under pressure. But give us an idea of sort of what you're seeing down the road as we do get further into the second half of the year.
Yes, so obviously like we are seeing the beginning parts of a rotation that are happening in the market. If you look at the market today, even going into this summer, I think there was reasons for pausing, especially with you know, the megacap tech stocks driving disproportional aspects of return. We do think there are values that are going on right
now in a rotational aspect. Back into the small cap space, we are seeing the gap between you know, the cap witted index and the equal cap index come back together, which is refreshing to say the least. I do think a lot of this is dependent though on you know, this is a big week, not sitting in the overstating the obvious with central bank actions and what goes on.
I do think if we do, if the FED does change some of the verbiage and we get more to certainty around a rate cut, more than we have now. You are going to see the propensity for small and mid caps to really appreciate here based on their corporate earnings. You know, we do think there's value, especially in different sectors that are so tech dominated. You know, in the
healthcare space, there's green shoots. We are seeing different sort of green shoots in various industrial companies that are being very attractive. Right now, it's been We're still looking at a market. I'm curious that. You know, from the standpoint of things do look very expensive on a high level. So any sort of rotation into different sort of value, you know, I think is a good place to be.
We are seeing our clients also reposition their portfolios in to potentially benefit from that rotation down Well, that's what I.
Was going to I was curious. I mean, when we talk, especially with individuals who are dealing with wealth management clients, I mean, it's long term, long term, long term. I get that, but I am curious, you know, is it plain vanilla equity, fixed income or is it a lot more alternative assets. I am curious when it comes to your clients where you are investing a lot of their their money.
Yeah, so when we define alternatives, it's just for the sake of suplicity, say anything that's not a stock in a bond. Our clientele has been alternative heavy for a long time, and alternatives program is typically structured in a couple different facets. We have a lot of real estate, both debt and equity positions, which you know at this point it's not a blanket real estate buy. We think there's selects sectors and opportunities we like in real estate.
You know, the student housing sector is especially interesting to us in the Sun Belt and what we call secondary universities. We are seeing opportunities, you know, in the debt space, here is a lot of companies and our clients are participating this have to refinance their real estate debt or their corporate debt. We've been long on private credit for a long time. In the different subsectors of that, a large portion of our client's allocation is in what we
call defined outcome strategies. They are similar to structured notes that banks have issued for a long time. We like the ideas of them, we don't like the fees. We have a platform where we can use the liquid options market to put protection on liquid indices, individual names that
are daily liquid. So from an alternative standpoint, and it's relevant to your point, the rotation that we see today, it is very advantageous for us to build these structures with downside protection very efficiently for our for our clients, which to your point is everyone says long term, long term, long term, you know, but there is the short term that does matter. I am guilty of this, and it's not bad advice with it. We've all seen market distress periods.
We're in the wealth management space. A client has been working with their advisor and they've said the words, hey, stay the course, it's the right course of action. That's not bad advice. However, when everyone says that there's typically opportunities right around you that you should be picking up. So we use those defined outcome platforms and structures to give our clients the luxury of options to be in right mindset to pick up those opportunities when those dislocations do occur.
Yeah, that's a good point, right. There's certain things that happen, certainly pockets within a longer term cycle that can be opportunistic, Walker, Thank you so much, Walker Williams. Cheap market strategist at Leado Advisors twenty billion in assets under manager. As we said, they are a wealth advisory firm. So yeah, but I know you're just like, can I go to VAM?
Yeah?
That sounds good. I'll be a market strategists there.
I bet you would.
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