All right, let's get to the next guess. Joe Gilbert's portfolio managed yet Integrity Asset Management discussing the latest on the markets, Joe Wilkins is a program. It does seem as that what we had was certainly look at what inflation was doing for the last few weeks and not looking at the growth picture. Has that been a tilt? No, UM, thanks for having me on. And you know, I don't know necessarily if there's been a tilt. I think the market that you know, likes to focus on what it
you know, what's in front of it. So you know, we have the GDP numbers that come out and we're more focused on the growth aspects, we get CPI and then the market pivots to more inflation where they're they're both are are are big concerns growth and inflation because one is running too hot and one is UM. You know, we fear is running a lot lower than people expect
right now. So you know, I think right now the market is probably ripe to focus on inflation, especially this week with Jackson Hole, because that's what UM chairman Pale is gonna focus on and where he is to markets and how he how strongly he talks down. Inflation is gonna pay pivotal how UM, recess has performed this week, So inflation, if it is turning, is not so bad
if you have growth. Um, we did have a strong job report, we had a strong services p m I, and we had companies announced earnings that were pretty solid on the week side, we have a market signal, we have the inversion of the yield curve, which suggests recession is coming. Um. What else are you looking at to
figure out that formula? You know? You know, I think right there in your question that you have some some good road maps there because I think what has happened here is that you know, we the market looks at the jobless the job numbers, which we were very strong, as you alluded to, UM, and then we have all the you know, the services p m I which was strong. A lot of these these indicators are are backward looking.
So you have right now that so the Fed will will talk about how strong the economy is, but it really should be saying how strong the economy was. So I think that is actually where we're gonna have this disconnect because if they keep layering on more and more rate hikes, in the midst of these lagging indicators. I think that that's how you get caught off size there, and then we end up in a situation where the FED is going to need to cut a lot sooner
than they are suggesting that they want to. So the question is, then, I suppose you know, with all the information available, Joe, how how do you take invest of that money? I mean, is this the time to be looking at some of those equity or so I say, industry groups that should performed badly Again, you've gotta be selective here and look at them once again. Uh, that's exactly right. That's that's how we're we're playing it right now. We look at it as the first and first out
market UM. And what I mean by that is at the beginning of the year UM, we had a lot of technology stocks, a lot of the earlier cycle cyclical companies UM sell off. And then you add on the flip side, the you know, more of the lagging companies and sectors such as energy were the ones that performed strongly. So we think right now what we've had is we've
had a pivot in the market. So what we're doing is we're just looking at more of the consumer discretionary names, which sold off strongly in the beginning in the first quarter of the year, some of the semiconductor names, some of housing names, because we think that's the contrarian play. But we also think that those sectors have already just counted, you know, a recession, whether it be mild or severe.
So I think that that is where you're gonna have the opportunities, and that's what you're gonna have the evaluation protection on the downside. Yeah, that's very interesting. I I let's focus on housing for a moment, then, because you know, we got some data last week that spooked a lot of people. Housing starts. We're down nine point six percent, and that sounds bad, but it's actually good for for the builders. It's it's good for prices, and so it's
probably good for people. The homebuilders have learned a lot since the GFC. Uh. They're shutting down the housing stars because they don't want a glut. But what some people would like to see is a glut because that would really bring down prices, and and that's not this no,
and I think that you're you're right there. I mean the housing the home builders have gotten religion they're managing their business a lot, you know, a lot more smartly than they previously have, so I we don't expect there would be a glut of inventory, and so with that that allows them to be able to be a lot more strategic and when they actually are building homes and making sure that the houses that they sell are going to be as profitable now as they were personally, you know,
a year ago. So I think that is the opportunity there. Unfortunately, as you also alluded to, that prevents home prices from really dramatically falling, and that owner's equivalent rent aspect of it that goes into the CPI from really falling um dramatically as well. Mhm, Joe, how does okay, we talk about what's going on with interest rate hikes, but how does quoditative tightening at the moment effect the way you look at investment? And I'll top of that, what have
we seen so far? Are we seeing any impact from it? You know? You know, right now, I think we're we're really on the precipice of actually feeling any of the quantitative tightening. I think I'm being honest, we haven't really even felt this full scale of interest rate hikes UM quantitative tightening. You know it's going to be full scale
UM starting uh next month. UM are are What we think is, you know, the market isn't really factoring in that quantitative tightening alone this year is roughly equal to twenty five basis point of a rate hike. So we think that you know that is there's additional tightening going on in the system. There's additional tightening with the money supply, with money supply coming out of the system. So all of these things actually bode well for inflation coming down.
We just have to get to the point is inflation gonna come down fast enough or rapidly enough that that the FED is actually lend the pulse. Alright, Joe, I like your style direct very good. Thank you for joining us here live, particularly on your Sunday evening. Kill Gilbert, portfolio manager at Integrity Asset Management,