Sunburn and Frost Bite

The SMP five hundred surged eleven in eleven days, erasing most of its loss for the year and this season, as the bond market carried on with its anti social behavior, with tenure rates hovering near the highest level in three years and a crucial part of the yield curve flirting with inversion. And obviously that's causing everyone to freak out about whether that signals a recession is on the horizon.

So what's it all mean? Was this just a bear market bounce or has normal service been restored to the bull market in stocks. We'll get into it with a veteran fund manager, but first pull down, I need to know, speaking of spring fever, are you are you experiencing any spring fever? I would really like the spring to arrive in New York City, right we haven't really seen it yet. It's been like thirty degrees for the past week. I

know it doesn't quite feel like spring. Just it. I gotta say, there's a woman in my neighborhood, a young woman who the minute the sun comes out, she's out there sunbathing. Really, it's like forty degrees out and she's sunbathing. This is New Jersey. After that, that would only I was going to say, that would only happen in New Jersey. Yeah, Florida, Florida possibly maybe Florida. Yeah, but they wouldn't have to wait forty I'm just worried she's going to have the

first simultaneous case of frostbite and sunburn. Maybe she's going for it, yeah, setting a new uh entry into the Journal of American Medicine or something, right, the Guinness Book of World Record. But I want to I do want to bring in our guests this week. I want to welcome David Bianco. He's the chief investment Officer of the America's at DWS Group. Thanks so much for joining us, David,

Thank you, Hello, Vidalia, and Hi Mike, Hi. It's great, it's great to have you, and I really just want to start out broadly speaking, I was hoping you would just lay out your strategy for us and how you're making sense of the market, What you're preferring, what you're not preferring right now, Well, laying out the strategy broadly, I guess as as Mike said, I would try not to get frost bite and sunburn at the same time. It sounds skiing injury. UM. It's it's a difficult market

right now. You don't know if you're gonna get burned by inflation or get frozen by a recession. Although I don't expect a recession in the you know, this year or so, we're quite concerned about the longevity of this cycle. UM. I feel as if this cycle has aged quickly. UH. It's aged mostly from very high inflation, much earlier than you typically see in the first couple of years of

a new economic expansion. The causes, as everybody knows, it's the pandemic, UH, the supply chain disruptions from that UH they really strong UH monetary and fiscal response and having to pay back some of that UM. And then and then the war that broke out with Russia's invasion in Ukraine. So we're worried about inflation. We're worried that the FED might try to fight inflation too quickly or too aggressively.

That could bring a recession earlier than necessary. But I'm just concerned in general about the way inflation is eroding the purchasing power of consumers in the United States, and inflation at these levels, with this type of volatility and associated uncertainty, it begins to disrupt the effectiveness of the economy. It disrupts price signals, and when price signals are distorted, manufacturers, consumers,

capital allocators, we all begin to make bad decisions. And I'm concerned that this, uh this economic environment is one where the risks are high and it's difficult to navigate it. I don't want to get some burned, don't want to give frost bite, So trying to pick pick some some uh see for investments, And I'm happy to talk about that as we continue our chat. Like the word play a lot. Yeah, I didn't realize my crazy neighbor would turn into an extended metaphor for the current current state

of play in the markets. This is great. Hopefully she doesn't listen to this and come and come burn me about something. But but David, you know I mentioned in that intro, you know when you see a bounce like this in the market, Um, every know it all on Wall Street comes out of the woodwork to say, you know, the biggest bounces often occur in bear markets, and that's true to some extent. I mean, yes, very often, these

these really fierce rallies that we look at. You know, when you go back to look at, well, when was the last time we saw an eleven percent move in eleven days? It usually is in the middle of the bear market, but but not always. But is that thought crossing your mind at all? Like that you know that this could be sort of a countertrend rally that we saw in March. Um, are you worried that will revisit those loads or maybe even set some new loads for

the year. Volatilities elevated, So we we've expected volatility to be high this year. It's playing out. And when you have volatility, you tend to get it more to the downside. Um. But when you've got big declines as we as we had um certainly since the outbreak of the war, you can get a big rally. And just as you're asking the question is what from here? My view is the SMP is more likely to return to something like four thousand before it breaks the new highs UH such as

five thousand. Five thousand's not totally out of reach, but to me, it's something more of a three um UH target rather than this year at this stage. So I don't think it's a dead cat bounce, but this cat's injured, and I don't think this cat can bounce higher from here. And David, I think you actually recently cut your target on the SMP five hundreds, so I wanted to ask you what you're thinking was behind that. We cut our

target twice uh so far this year. We went into the year with a five thousand target for the SMP five hundred at the end of this year, because I just said, I'm thinking that's more appropriate for the end of three at this stage, maybe a little bit higher if inflation finally does come back down close toward the

FEDS two percent target. But we cut our target from five thousand to forty eight hundred in mid February on very high inflation and that, you know, causing us some concerns, and then all of our fuel being added to the inflation fire with the invasion, so then we cut again tore on the SMP. What we've tried to explain is that we only slightly trimmed our SMP earnings estimates. We went into the year with a two eight dollar SMP

earnings estimate. We trimmed it to two. I do think there's a little bit of risk to the downside of but we try to convey that we were raising our estimates at the energy sector by three or four dollars but trimming it everywhere else by about six bucks. And I think there's still remains to be seen how well the consumer sectors, the manufacturing part of the sm people weather this high high costs of production and high costs now of of consumption. You know, David, I was. I

noticed you are overweight banks, which I find interesting. Uh. Note you sent us over before the podcast. Uh, you wrote that we set the FED fighting inflation with rate hikes is good for banks even if the curve goes flat or slightly inverted. I wouldn't unpack that a little bit, I mean to me, I guess the big question is on a lot of people's mind is that notion of deposit beta. You know, if if the FED lifts interest rates, the short term rates rise in response, banks won't necessarily

raise those deposit rates right away. Um, you know, and I'm curious how you're thinking about that. It seems like in the last rate hike cycle, we saw that that that banks were very very reluctant to raise deposit rates. Um, they're not exactly competing for deposits these days, they have plenty of them. Is that is that part of your thinking or is there something else about things banks? The banks are flush with cash, and the evidence of that is simply the reserves that the banks are holding at

the Federal Reserve. So first, as the Federal Reserve raises rates, banks will earn higher interest immediately on the reserves they have at the at the Fed. And uh, it's gone from zero to five basis points, and the Fed seems pretty committed to hike rates six more times this year every remaining meeting. Remains to be seen if they slip in a couple of fifty basis point hikes, but immediately that boots the net interest margins at the banks, and to the extent that they are needing to pass some

of that forward to the deposit base. As you said, it looks to me that the biggest banks have so much excess cash that they will unlikely be raising rates as fast. You can think of the deposit data is probably it's gonna below one, probably point five. I have a feeling that it's not just there'll be a long lag as well. So what you need to keep in mind is that net interest margins are are not the only part of bank profitability, but they've been the very

depressed part of bank profitability. And I see that finally going in the right direction because the FED is raising rates to fight inflation, and therefore we think that banks can be a better inflation protection play than most people give them credit for. But what's key here is that when you look at energy and oil, people think, well, that's maybe a more obvious inflation protection play, particularly of geopolitical risks. But you have to ask yourself the question,

how sustainable is oil at these levels? Whereas I think the increase in interest rates there'll be plenty more to come, and we are finally just moving into more normal interest rates. So it's it's a move upward in earnings, but a move upward and also sustainable earnings at the banks. Whereas energy, yes, they're gonna be very profitable under these conditions, let's see how long that lasts. So speaking of the yield curve and the inversion that was obviously one of the big

stories this week. So I have a Reagan special. I have a two part question. So it's going to be lengthy, but not as lengthy as Reagan's questions usually are. But I wanted to ask you about this. You work on that, I'll work on it, yeah, But I wanted to ask you about the seemingly conflicting signals in the stock market versus the bond market. And then the thing that everybody is wondering about is is this time different in terms

of the yield curve inversion. Well, I would just jump into saying that the yeld curve is is an important indicator. We watch it, watch it all the time, but you know it's effectiveness is just not as strong as as as it's fable to be um. In fact, the YEO

curve not It has been wrong. It's been wrong each of the long cycles UH in the United States and nineteen sixties and the nineteen eighties and the nineteen nineties, we had flat to inverted curves on the tenure yield to overnight rate or even the three month bill rate, which is a part of the curve that we watch. Some people debate this. I think of the two to ten year part of the curve is more about term premiums.

But when you look at the overnight rate relative to ten years, you're getting more of an economics signal, and you're also getting the impact of what the Fed is doing to the economy immediately with the Fed funds rate. So I look at the tenure yield minus the Fed funds rate, and the curve went flat to invert it in in nineteen sixty six, u uh and and and and and we had an economic expansion that continued. It

also happened. And what's interesting about that is that of the ten times that the curve has really gone flat or clearly inverted, three of the times it was wrong, we had economic expansion for several more years. And the seven out of ten times it was right at the time, it still took one or two years for a recession to hit. So it's a useful indicator, but it's a It's not infallible, and I think of it as being just about as accurate as simply the length of the

economic cycle. And we always have this mental model of how long should a US expansion be. We've I have moved and most of us have moved from thinking economic expansions on average or typically from five to seven years, can be ten years or longer um. But you know, we've shortened our expected lifespan of this cycle given the inflation problems. So just as the cycle ages is as much of a prediction of it's of the next procession as is the the inversion of the curve. Processions happen.

That's why the Yel curve is right. Processions just eventually typically happen, but they don't happen um in a short time frame after YEO curbing versions and the curve has been wrong. I would say thirty percent of the time.

You know, well, Dona, just because I know you're wondering. No, I do not remember the inversion of the nineteen sixties if if if, if you're wondering, I was wondering well, and and and the one he mentioned before that the nies and yeah, yeah, out that too, because you know, in nineteen sixty six, FED chairman William M. Chase Martin was really aggressive with inflation at the time, and he hiked aggressively, and there was actually a brief bear market um for the SMP five hundred, but he hiked and

then he eased off cut a little bit, and we had economic expansion to nineteen seventies. So not only was the curved wrong, uh during nineteen sixty six, but there was a soft landing in nineteen sixty seven. There was also a soft landing in ninety five after the nine eight four hiking, which was kind of vokers, you know, last word to markets of I don't think I'm not going to fight inflation if it comes again. And then nine four, which is the dreaded year to all bond

investors of of a bond bear market. Well, the FED did stop eventually and pulled back a little bit, and uh, the the the the economy continued to expand all the way through the late nineteen nineties. So I hear people say all the time the FED is never engineered or soft landing, but it has engineered a soft landing in each of the long cycles, just as the curve is wrong about the fedsibility to engineer soft landing and those

long cycles. I actually wanted to ask you about that too, because I think we heard a new phrase this week. One of the FED members called it a safe landing. So I wanted to ask you what what probability you put on a soft landing or safe landing this time around? Yeah, fair, fair question. I mean, you know, soft landing versus crash landing, soft landing versus turbulent bouncy you know kind of you get off the plane. Thank got to survive that flight.

We've all had many of us have had one of those. Uh, it's gonna be bouncy. And I think the FED knows that. I think they're concerned as the pilot here, and I think that's one of the reasons why they're talking so hawkishly, is that they probably figured the more hawkishly they speak, hopefully, the less hawkish they need to act. So I know I I and I I welcome their hawkers speak. I welcome their UH fight against inflation, and again it's good

for the banks. I just hope they don't push too hard because I don't know that they can bring inflation down as fast as they would like it to given the external factors like oil prices geo political conflict driving inflation UM so high and above their target. It doesn't mean inflation needs to stay at seven eight percent. It can work its way down toward the FEDS target, but it's gonna take time for the inflation to get back

to the two percent target. And I don't think the feture to Russian I think the fetcher just take actions that ensure it's trending the way they wanted to trend. David, I wanted to jump Overseas a little bit and talk about Asia because I know you are overweight Asia, and we talk about a roller coaster when it comes to China. You know, not too long ago where everyone was saying this market is simply uninvestable. Uh, there's too much regulatory risk,

too much policy risk. And then boy that that turned out to be sort of the wrong take. In the short term, it must be keeping up at night watching watching that Chinese market. But how are you thinking about China specifically? You know now that Shanghai is locking down. Um. In your notes you point out, you know, we're not quite sure if if China's on our side or the Russian side. They're trying to be Switzerland in this and who knows where what directions that that's gonna go. But

how are you thinking about China right now? Are you? Are you bullish? Oh? I'm well, yes, I'm overweighted. Uh, and and it is still a small part of our asset allocation portfolios, but we are overweighted. And I guess I would say maybe my conviction does online with the with the overweight, um the amount of the overweight, But our our view has been that it's worth the weight, it's worth the turbulence as long as China shows us that they're you know, with the West rather than doing

something that's against the West. And it's not just a matter of you know, will they be hum a good player in the world, in the world community, but will they also give you know, some freedom to their entrepreneurs and their big leading private companies, their tech companies, and and and I think this is an economy that needs more innovation to address its challenges, and and and and and usually frame markets and entrepreneurs help you figure those

things out. So when it comes to China, we went into the year thinking that one kind of conciliatory speech from jijimping to the world and and to investors would get that market rallying really strongly. But you know, the

market fell more than we expected. And finally we got a little bit of a consuliatory speech from Juli um uh sorry lou Lee, who uh and uh and and and and and ever since, the Chinese markets has had a nice strong bounce off the bottom, but it's still had a had a tough year and down a lot from the highs. What we're doing from this point on is is watching whether China gets distances itself more from Russia.

I think if China is scared straight by the way the West reacts to unacceptable behavior out of Russia, China reacts, you know, the right way to that, that should help

Chinese equities and uh. If they show that they're that they really value their free markets and there and there their companies, Uh, then I think those equities have a long way to climb upward because there at such steep discounts given the quality of the businesses that they've got um, particularly their technology type businesses and digital consumer type businesses, there are big, big discounts to the comparable businesses out of the United States. And the thing about China's it's

like Texas, everything is just bigger. So if they don't repress these businesses, they've got a world of potential and they can really help trying to find solutions to their challenges. What about here at home? What sorts of things do you like at home? I think when I was reading your note, you like tech on communications and also at the same time, what do you not like? Well, we're basically equal it on tech in a little overweight on communications.

And that's the big part of the SMP five. I mean, the SMP is a growth index. The SMP is a digital index. At this stage. When you add up to tech the communications sector, Internet, retailing and a handful of other things you can find other industries, um, you get the SMP being digital. So our view is a little tactically cautious, but long term constructive, particularly if inflation can come down on the SMP and thus the same on technlogy.

But my preferences are healthcare banks as we talked about UH and healthcare is just an area where I find the valuations to be very on demanding um and and not connected to interest rates at all. And we continuously see good sales and earnings growth coming out of the pharmaceutical companies and the biotech companies, particularly if you just lump them all together, because it's hard to even distinguish them anymore. They're all medicine makers and they all have

very enviable economies. Of scale and profitability when they have a breakthrough and and and a winner. And I'm optimistic on on on innovation. I'm just so encouraged by what the medicine makers were able to do around the pandemic. And I think they've impressed themselves that they are more motivated to reach for um more cures. And I think politicians need to understand that the medicine makers are part of the solution, not the problem. Healthcare is something we

all need. It's gonna cost more, and I believe if we let these healthcare companies thrive and do what they do best without worrying about political interference or interferencial price caps, that this sector can do extremely well the rest of this decade and longer. What David, I, I know one thing you're not super excited about is housing. UM a

little worried about housing as as rates go up. And I wanted to ask, you know, obviously, if if you're old enough and you hear a downturn in housing, you think back to oh eight oh nine and how vulnerable the financial system was to that crisis. Obviously, you know, I think the consensus is that it's it's sort of you know, in better shape to withstand any any type of housing crisis this time. But still, I gotta think that a housing slowdown is a pretty nasty drag on

the economy. You know. I remember reading somewhere that I think it was Tom Lee at a fund strat UH years ago said that every new how use that's built is you know, adds three jobs to the economy something like that. Um and who knows if that number is right, But no, boy, I gotta wonder about a cooling off of housing if that's a major headwin of the economy. Is that is that sort of where you would center your attention to look for any any sort of ability.

The thing about housing is that it's an important part of the U. S economy and uh and and there's also a very important relationship between housing and interest rates. And it's not just how interest rates affect the value of housing. It's also how housing and the increase in the housing stock and the increase in the value of the housing stock has a lot to do with loan growth. So you know, housing is something that any you know, economists thinking about g d P should think a lot about.

And it also has a lot of influence on interest rates back and forth loan growth as well as being a big part of the profitability loan growth and and and interest rates of banks. So when you're thinking about the economy and you're thinking about banks, you should think about housing. But the SMP five has never been as sensitive to that. The SMP is a lot more sensitive to the digital economy, and it's also it's a big manufacturer and commodity producer. So what I'm getting at is

our view on housing is kind of uh. Yet, we expected to slow down, and we expected to actually slow down quite a bit in the areas of home goods and maybe even home improvement. Um. But I do think that and and existing home sales have slowed down a lot, and I expect loan growth to slow down, but banks will still make more money on the interest rates that we talked about. I would just point out the nuances. I think new single family new housing starts. I think

they keep grinding higher. I think the prices of housing is at a level where it's still quite profitable for home builders to build homes. Uh and I think they'll keep doing it. And uh So I expected to be volatile as we're going through rising interest rates and a lot of debates about where interest rates peak. So that's not great for home builders, but within the whole housing world, I'm comfortable with home builders and I still like banks.

I don't expect any kind of credit cycle UH downturn, but I am cautious on on home goods and and home and and and home improvement type retailers. Another story that made waves this week was the CEO of Restoration Hardware, which I think is just called r H now, but he UH on a conference call. He was saying that consumer spending was slowing and that there's demand destruction related

to inflation. So I wanted to ask you to to look ahead and talk about what your expectations are for this coming earning season and if you're going to be looking for those types of stories in terms of, you know,

what's happening within corporate America. So we're going to go into to earning season and in a couple of weeks and it will almost certainly be as it always is, that two thirds of the companies will beat on earnings and maybe half on sales, and companies that miss will get beat up really badly, and the companies that beat will will go up. But not as much as the ones that miss go down. That's just always the case. Uh. What I always trying to focus on is the sequential growth.

And I do believe that Q one earnings, even beyond the seasonal effects, will be will be below Q four. Q four was about fifty five dos SMP earnings, UH one, and I don't think we do as well in Q one, despite you know, improving earn earnings at the energy sector, and that's where it comes down to the mix of earnings. But they just start seeing this shift of earnings going into the energy sector, but coming out of the consumer sectors.

The supply chain disruptions can tinuing at so many manufacturers, industrials, auto, um so I think it's not it's not so much about a couple of things. It's not so much about well the earnings, you know, beat or miss, they'll be flattish sequentially, and I expect him to be flatish all

the way to the fourth quarter of this year. And when I look at the earnings that I'm expecting for the end of the year fifty eight dollars fifty nine dollars per share of the fourth quarter, I think almost all of that earnings growth on a year on your

basis is going to be inflation. So we're finding that there's this shift in the earnings from you know, higher quality businesses to dare I say lower quality businesses or at least the sectors that investors always put lower p s on, like energy and uh, even though the earnings are going to grind their way higher over the course of the year, doesn't look like they're gonna outpace inflation

over the course of the year. Now, I'll take it, we'll take the inflation off set, but we we tend to prefer real earnings growth and real returns on SMP investment, and it might be a year of no better than just inflationary returns on the SMP. Yeah. Uh, you know, David, I know you're you're cautious about sort of a slowdown in consumer spending, which I think makes sense given you know,

the higher prices for fuel and food and all the staples. Um, I'm curious how you're thinking about if you're and if you're thinking at all about sort of the retail spending on stocks themselves, because I'm guessing for a guy like you, it must have been kind of I don't know if frustrating is the word, or or aggravating to to watch this whole reddit phenomenon, uh develop and see these sort of junk stocks just going crazy because they're they're getting

pup pupped on social media. I do think though, there there must have been some sort of halo effect for the entire market though, and you have this new sort of speculative massive people just buying, you know, with both fists whatever they can. Um Is that a head went to the markets who just the you know, sort of a lack of of dry powder in in your average person's robin Hood or e trade account to just go speculated. Is that ultimately a head went to the market? Question?

And you know, it has been frustrating, maybe for no other reason other than it's hard to predict what those those investors are going to do, what they're going to value, what what what stocks, what causes they're going to support. I mean, there are certain companies electric vehicle makers where you think, to yourself, this ownership base is really enthusiastic about the mission and I kind of get that, and arguably maybe they're willing to accept a really low, you know,

cost of capital or long term return on capital. Hard to know because they've made a lot of money so far, if they're really comfortable with low returns and in the future. But then you get these odd other type of causes, like let's just get this movie company some capital to

go see if they can do something with it. So it is frustrating as much as I welcome participation in the equity market, because I think the more people that participate and the more diverse views you bring to capital markets, the more efficient they're likely to be, at least you hope. And then the thing I like about capital markets is

that it's a dollar weighted democracy, if you will. And often I scratched my head and I think to myself, particularly when you look at, you know, the bigger cap companies, how do these individuals have enough money to be swaying stocks as much as they might be. So just sharing some thoughts. I don't think I have any you know, clear views on this one. If anything, I try to stay clear of stocks that look to me as if

you're being you know, swayed by the masses. Not because the masses are wrong, but I'm having a hard time predicting, you know, how their views might play out or the time right the reeks of crowded trades, and a little bit too, I guess to somebody, you know, it's just a little too sentiment. And while sentiment is important, it's really difficult to predict. Well, Donna, you know what else is important for us, at least for us that our listeners.

I believe that I've many many patiently awaiting for Dun Dun Dune, the craziest things we saw in markets this week. I'm gonna get us started, um for once. Usually I saved the best for last, but this time I'm gonna get us started. I wish everybody could see me rolling my eyes. Oh they can see it. They can see it right through their headphones. The Wizard of Oz. I'm sure you've seen the Wizard of Oz, right. Do you remember the tin Man? Uh? He carried around an oil can.

So this is timely to today's market. The tin man had an oil can because he would rust up and they would have to sport some wheel in them to keep him moving. Well, CRUs gs W Auctions just auctioned off that oil can from the movie, the actual oil can. They do not the story and and this is courtesy of TMZ. They don't tell us whether or not it was actually filled with oil that might move the needle on the price given given the current price of oil.

But it's all for auctions, so it's time to play prices, right, Uh, David, let's go with you first? What do you think the winning bid for the tin Man's oil can? Wash? I'd like to see the certification of the offenic Oh gosh, I mean I'm not gonna go I I could see how I'm gonna go with dollars. I get a kick out of how seriously our guests take this, uh, like like their clients are gonna be like, he didn't get the tin Man's oil can? Right? How can I trust

twenty dollars? What's your what's your bid for the Wizard of Oz tin Man's oil can? And the rules are if I'm If I'm over, then David wins, right, you know if if you don't know the rules by now, I'm just laying them out again. Closest to the pin, closest to the pins. I'm gonna go with one fifty for for the tin Men's oil can. I know I'm with you, David? Who pays for these things? I don't know,

but I'll tell you this. Here's a better one. There was a violin that was played, uh, that played on the Somewhere over the Rainbow track from Wizard of Oz eight year old Stratavari violin. They think that's gonna fetch twenty million when it goes off up for auction this summer. So you'd have to lever up that oil can to get the strap to Bory. But those things I think

go for that kind of money no matter what. There's old violence, I think, so yeah, yeah, So this one has the added bonus of having played Somewhere over the Rainbow on the Wizard of Oz. Anyway, Bilda, can you top that? Maybe? Maybe not. My My story is not a hundred markets related, but I thought you would really like it and our listeners would really like it, so

I'll make up markets connection. But we know Jersey City was in the news recently for basketball, But did you know that they were also in the news because they're the first place to install a burger vending machine. A burger vending machine. Yes, so it's a company called robo Burger. You order a burger, you can use Google or ap Apple, pay to pay, you can get catch up mustard all

the akucha bats. It's ready in six minutes and it comes out of the vending machine, and I you know, it's the perfect place to test this new Jersey of So they grow up the burger right there in the machine for you. The vending machine does. Yeah. I mean, that's kind of surprised it took this long for that. Back in my day, I don't know, they used to have those automat things where you go and you put the quarters in and open thing. But that was some

ham sandwich that's sat there for like three weeks. This is this is burger. All right, Well, I'm gonna go try that that burger machine. Sometimes how much does burger? We should take a we should take a field trip. I don't remember how much it costs, but I just imagine this is gonna. I don't know how well it's doing in Jersey City, but it could potentially do well elsewhere, and then soon this company will be more and more

in the news. I would just hope that by now you would know the price discovery is important on that burger. I need to know. I'm sorry, that's pretty good burger vending machine. It's not at all markets related, but I but I'll allow it. I like, once they're a public company, David, for what are you paying for a robot burger? Say? That thing comes out quickly and tasty. I picked ten bucks for robo burger just to watch it. What it happen is pretty exciting. It's seven dollars. It's seven. There

you go. There's auto activity right there. And I like the name. Got to be some big margin on the robo burgers. All right, keep an eye on that space. That's pretty good. How about you, David, you see anything crazy this week? It doesn't compare to anything like the robo burger, can um. One of the things that that surprised me a little bit this week was this week.

In the past few weeks, you've had such a big upward move in long term interest rates, and yet this is the time that utilities decided to break out to all time highs UM. And I like utilities, uh and natural gas prices do help them, and I think it's a terrific bond substitute. But I wasn't expecting utilities to break out the all time highs and deliver to refic

returns just as bonds were taking a slacking. So a little bit of a surprise, but doesn't beat the robo burger or the so so you know, I didn't want to ask you about utility. So what do you think is that play there? It's it's actually not sort of a yield player, or is it is the dividend yield play if if you know their yields, aren't you know? I think it? I think it is. You have to keep in mind it may not be a giant dividend yield, but dividend yields and earnings yields or real yields you

should get inflation protection. So if you compare the dividend yield um to tend your tips yields, which are still negative UHT basis points still that is that is a lot better than than than bonds and even and even tips which do offer some strong inflation protection. There are. The thing is that the government's committed to investing in the in the grid. Uh, the utilities will benefit from that. Natural gas prices tend to set the incremental price of electricity.

Electricity prices will be going up, and that's gonna be tough on consumers, but good for utility companies. And uh, lastly, I just think and this is gonna take time. But the utility industry, they own the key distribution for for for power. You know, we used to energy as coal and a solid. Then you know oil and liquid and natural gas is really important right now and energy is a gas. But the future is energy as a current, and the currents go through the wires, and the wires

are owned by the utility companies. That's interesting. Kind of your low volati volatility play on Tesla and and the v makers of the world, I guess, and in some extent that's that's pretty good. Well, David, always a real treat to to catch up with you and hear what how you're thinking about things. UM, really appreciate your time and I hope we can have you back again, so looking forward to it. Take care of Thanks for joining us.

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