Okay, Well, Johnny's Michael hands That, chief investment officer at Clarfield Citizens Private Wealth, getting his take on this market volatility. Michael, thank you so much for joining. Is you know, as a private wealth c I O if you will, What do you try to do right now? Is it trying to perhaps go in the field of wealth preservation rather than actually accumulation. Thanks for having me. The environment we find ourselves in, I mean, I think there's a little
bit of both. But when we look across the landscape of investment opportunities, as much volatively as we've seen, and certainly for global portfolios, this has been a really challenged year. We've we've seen a stark difference in in the yield opportunity that we have today relative to where we were
just a few months ago. And so I think it's a combination of not necessarily principle preservation, but a higher degree of certainty of more optimal returns where even on the front end of the yield curve you can certainly earn attractive yield, which leads investors to question how much risk do I need to take to hit some of
my target return levels going forward? Yeah, but you can almost think of it the other way to which is if you can get four percent on a two year treasury and you can get five to six percent on Muni's tax free, and you can get slightly higher than that with aspects of of corporate you know, investment grade and even high yield, then it's you know, you didn't used to have that, and yet you were still gambling
or playing in the equity market. But now that you can get pretty solid yields on around say five to six percent, does it almost protect you to a certain degree that you can make some bets on equity given
the big sell off we've seen. Absolutely, and and so I would tell you we think about the sequencing of events and how they're going to occur, and despite today's considerable rally, again we tend to find some of the sharpest advances, you know, just ultimately proving to be nothing more than a bear market rally, right we're positioning became extended. So this very well maybe the early stages of a similar outcome to what we saw earlier on the summer,
but we're really not adjusting our equity allocations meaningfully. Where we see opportunities unfolding during the course of early we're entering into the fourth quarter, is on the capacity for investors to now more comfortably extend out the risk spectrum from a duration perspective, because of your exact point where they're finally being compensated after many years where rates and you know, we're extremely low and Tina, there is no alternative.
Was was the prevailing theme. They really have the capacity to generate reasonable returns. And so as we came into this year, our biggest concern wasn't necessarily an equity market draw down, because it's really difficult to forecast near term returns. Our longer term concerns were that with low risk assets
producing negligible yields, diversified portfolios would fall short. We've adjusted our expectations in our capital markets assumptions, and so we really do believe equities will be volable, and clients are comfortable with that. Right, they don't love it, but they're accustomed to the volatility that comes with outside levels of return. What they now are getting optimistic about is your exact point of being able to generate attractive levels of income
that is considerably higher. And as a counterintuitive as it seems, the sharp and quick policy adjustment rather than a prolonged bleed where interest rates grind higher over an extended period of time, or certainly they stay low into perpetuity, is actually the best outcome for compounding income. So it's not
all negativity. Al Right, Well, let's let's say you know, one thing that Brian and I have been noticing of late is the amount of people and guests that we've had on the program suggesting that they are seeing liquiditcy just perhaps coming out of the system. Are you seeing that and would you attribute to that to q T well? And could I just piggyback a little bit on the back of that, is that even if there is liquidity, it's the spreads that have widened, you see, you're seeing
that in different segments. Look, I found today to be really interesting where it does seems if a lot of the activity that we were seeing even late last last week we saw several days were in the morning session or early on around seven eight am, you would see, you know, a considerable move higher in the ten year and for for most of this move, the back end
ten out of thirties had really been pretty anchored. A lot of the activity and volatility, the increase has been in the two year really the front end of the curve. I think a lot of what we're seeing today play out is that much of what we've been experiencing has been around trying to position for some of these shocks in the system that really today leads many to believe that this was a you know, more driven by some of the foreign illiquidity than what we're seeing in the
treasury market. I don't think it's great, but I don't think we're at an instance or an intest where we were seeing a breakdown, and I think one of the areas to look at as well as certainly within credit spreads on the investment grade side, we're really not seeing, you know, the type of gap conditions that you would expect given the movement and activity that we're seeing across you know, the treasury curve. But it's certainly something that
I think bears watching. But you know, it's days like today where you're never gonna get the timing right and there's going to be meaningful action. But you know, from our vantage point, directionally, you're starting to receive compensation for extending duration. And we've been asking this to everybody too. I mean, you're you're seeing volatility, but not financial system instability. Correct, Correct,
You're not seeing the instability. And I think a lot of the stems from the fact that there's a tremendous degree of pessimism, and at times you almost question is there a lot of pessimism because we're looking at negative equity markets, or is there pessimism because there's real deterioration in the overall economic environment. And I think it's more a function of the volatility. Okay, Michael, thanks very much, Shu. Up against the clock, coming up to the top of
the hour. Michael hands his chief investment officer at Calarfield Citizen's Wealth Private Wealth. This is Bloomberg