We had joined by Joey Gilbert, he's portfolio manager at Integrity Asset Management. Enjoy plenty of we had news around at the moment, plenty of bad news as well. We seem to talk about recession every day. We've had another really hot inflation print out of New Zealand. Do you feel like markets have got all this priceton now or
is it possibly more downside to come? Well, well, thanks for having me, and I'm sad that you guys weren't gonna sing before we started this um But I say that now, um no, I think that ultimately, you know, the market has really discounted a lot of slow down and slowing that is happening in any economy or you know, around the globe. You know, I think that it is
really adequately kind of priced that end. I think that it hasn't priced in a full all out on deep recession um so, so right now when you actually is it pricing and bad things, I think we have gotten there. I think that probably where we are is more of our base case that we're we're in a technical recession um and so, which which means that it really doesn't matter because you know, the psychology of it all is
gonna act like it's a recession either way. But I think that the markets are kind of discounting that we're gonna have a slowing earnings a reset um mind you um, but we're really markets are really looking forward to three at this point versus the back half of the year. So when it comes to having to put money to work in an environment such as this, Joe, where do you have the highest conviction? Where are you really kind
of stepping up and going all in so to speak? Um, you know, we we we try to make sure we don't have too much conviction sometimes because there's a lot of uncertainty that is happening right now. And like the way we see the market is we've going the market has gone into the late cycle trading and kind of actually out of that like late cycle to more of
the recession downturn playbook. So you know, when we saw last month with energy and materials, um, those names that had held up pretty well being like the only names that were positive positive returns, and then slowly that you know, the market came out to them as well. And so now you get to the point where investors are trying to play defense, but defense is too expensive when you try to go into consumer staples or utilities or even
some some parts of healthcare. So what we're doing is we're we're really trying to be UM a little more measured UM. What we're looking at evaluation as a guide here. So we're we're UM, you know, waiting into financials, waiting into some of the consumer discretionary names. And a lot of these names, especially for consumer discretionary names, are trading below where they were during the height of the pandemic, in which we think that's a little overdone. So those
are what opportunities are right now. We still think, like I said, we think it's probably too late to play defense UM at this juncture. Given to our base cases, that is not going to be a really deep procession. So with that in mind, if it's not going to be a deeper station, when would you expect to see
some up train to start to resume. You know, we think that this quarter um of of earnings UM coming up second quarter earnings with management most likely being UM if they really want to help themselves out really either suspending guidance or or taking dramatic UM pack the guidance, which which we've seen actually companies that have done that over the past couple of weeks um that have been uh you know, not necessarily pessimistic, but more realistic about
the environment. They've they've gone on and been rewarded. So they've actually turned out to be trade higher, you know, two days after their earnings announcement. So I think right now the market is looking at earnings as a clearing event. Obviously, the big the big thing that's out there that will give everybody some calm is knowing when the Fed will stop um raising rates. And and actually we really think that will be sometime and um, you know, probably you know,
fourth quarter, but maybe even at this quarter. You know, I think that if they can give some sense that September, if they go in September that that is where they want to pause even further, I think that will give us set us up for a nice fourth quarter rally. Although you know, we will will you know, make up some of the losses we have this year, we don't think that we think we still have a negative year
in for equity market. One of the things Joe, as you know, that's been a little concerning, especially where the multinational is concerned, as this resilient dollar. And even if the FED were to go maybe on hold, let's say hold in the autumn, as you just kind of suggested that, does that necessarily mean that the dollar is going to retreat a bit and give some relief to multinational firms? Now? I think at that point, I think the dollar will
be similar to inflation. I think I think we're we're to the point where we where, you know, we think we have peak inflation. I think we're close to peak dollar as well. Does a dollar need to fall dramatically? Um, I don't think so in order for multinationals work. I think it just needs to stop appreciating. And I think so the pace that we've seen over the you know, the previous seven months, we think that is probably you know, similar to inflation. They kind of track each other with
a tight correlation. So we think that as inflation starts to slow down and moderate, the dollar strength will do the same, which will follow, you know, similar to FED actions. Speaking of the fade to everyone's got an opinion on what the Fate is going to do in July, I'd like to hear yours is going to be the last meeting until September. This one so that's their chance to
go big here prevent inflation from becoming entrenched. You know, from the Fete speak that we got as far as if there was anything as far as um guiding us where they wanted the market to be, it feels like seventy five is pretty much baked in the cake. I think the hundred basis point um thought of that was a lot more reflective as far as when the market saw the inflation numbers last week. So it looks like
seventy five is probably most likely. Yet, I mean, and granted, we're still kind of cautious because we think that there is a risk that the Fed will go too far. They're they're trying to judge a lagging indicator with somewhat real time tools, and that really puts them in a predicament that there's always a time and mismatch and so that you know, they never know if they're gone too
far until it's too late. So you know, we just we we think seventy five is the case for you know, next week, and then you we hope that maybe there's a fifty basis point in September and they and then they're done for the year. Are you looking to pick up a little bit more exposure, let's say offshore. I mean, we're talking a lot on this program about markets in
the Asia Pacific. Are is there anything there that you like, you know, when we think about all sorces where US based investors, I mean, we're we're really you know, our biggest fear right now is, you know, we talked about a lot about the US recession. Our biggest fear is what is going to happen in Europe and what that actually does as far as cascade throughout the you know, the global economy with the US and with the UM
Asia as well. So we're, you know, o, our biggest thing, we're really watching Europe because we think that is going to be the lynch pen as too far as how you know, the fulcrum, as far as how Marcus actually react and how they go into three and so that we're using that as a guide. Unfortunately, we're not as
constructive there because we have winter coming. We know, you know, there's no resolution for natural gas there and so it's it's it's a big area of concern that I think is one of the things that's under the radar that no once talk Joe Gilbert from Integrity Asset Management. Thanks so much. This is Bloomberg