Episode 121 | “Back-to-school” themed market outlook

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Unknown

Commentaries for general information purposes only. Clients should seek professional advice for their particular situation.

 

00:00:06:23 - 00:00:16:13

Unknown

and, you know, when you used to go onto like a modem and it would be like you would hear that noise, it was like a scratchy noise and it would be like,

 

00:00:16:15 - 00:00:17:12

Unknown

you got it.

 

00:00:17:13 - 00:01:37:28

Unknown

But like, you know,

 

00:01:38:00 - 00:01:46:14

Unknown

Und.

 

00:01:46:17 - 00:02:17:28

Unknown

Sie.

 

00:02:18:01 - 00:02:33:08

Unknown

strategist at Manly Investments. And with me today, special guest is my or my colleagues from the US Emily Rowland and Matt Miskin, also coach investment strategist. But for our John Hancock Manulife Partners in the US. Welcome to the show.

 

00:02:33:10 - 00:02:35:08

Unknown

Thanks for having us. Kevin. This is.

 

00:02:35:11 - 00:02:36:11

Unknown

Yeah. Thanks for having us.

 

00:02:36:11 - 00:02:37:16

Unknown

This is the first time you guys been on the

 

00:02:37:22 - 00:02:45:04

Unknown

I was your guess once. Maybe at the beginning of the year. I guess it was really memorable for you,

 

00:02:45:06 - 00:02:49:01

Unknown

I can't remember what I did last week. Never mind last year or the beginning of the year. Come

 

00:02:49:04 - 00:02:50:22

Unknown

memory short. I'm getting all these

 

00:02:50:25 - 00:03:00:02

Unknown

So we in the intro, we talked about, you know, getting back to school. And this is always a great time. My son is actually starting high school right now. He's I know in the US they started earlier in school.

 

00:03:00:02 - 00:03:29:19

Unknown

But my son's doing this kind of a Head Start program. And it really gets us in the mood for this idea of we're back to regular schedule programing, shall we say, back to paying attention to the markets and the news flow, putting away our summer mentality and probably a more relaxed environment, and more importantly, preparing for the schoolwork coming ahead and which classes are going to be the favorites, which subjects be the favorites, and the markets have the exact same ideas.

 

00:03:29:20 - 00:03:49:06

Unknown

You know, AI has been the favorite class so far, but or a favorite subject. And we'll continue and how things are going. So we're going to talk about our views, kind of this context of back to school and see how we think things are going to happen for the rest of 2026 and of course, into 2027. So I'm going to start off with the first subject is economics 101.

 

00:03:49:08 - 00:04:08:00

Unknown

And we we're looking at the US. And at one point we were talking about resilience and how the US is being resilient. And I would say now we're almost in this I hate to say Goldilocks, where it's pretty darn good in terms of the US economic backdrop. It's not resilient but actually good economical growth. How do you see the backdrop of the U.S. economy right

 

00:04:08:02 - 00:04:24:07

Unknown

Building on the back to school team, I'd give the US economy like a B or maybe a B+. Kind of reminds me of my son's grades a little bit. He's going into his junior year, you know, he's on the ball team and we're really proud of that. But he's not breaking any new academic records. I'll put it to you that way.

 

00:04:24:08 - 00:04:55:09

Unknown

And, you know, we look primarily at the labor market as being is being the key. And it's sort of hot, not too cold. We look at really timely indicators like initial jobless claims. Those come out on Thursday morning. That's one of our canaries in the coal mine, meaning that I guess we're on to science class or wherever that would fit, but meaning it's an early warning sign that there's maybe something more sinister going on with the economy.

 

00:04:55:09 - 00:05:29:06

Unknown

And they've been in the low 200,000, actually, even dipping below 200,000 for a couple of weeks recently, which is the lowest level since the 1960s. So that indicator is telling us again, that we've sort of got the all clear from a from a firing perspective. But on the other hand, companies really aren't hiring. In fact, if you look at the last jobs report, the US economy actually shedded 23,000 jobs and the prior to months revised down by over 100,000, seeing some weakness there.

 

00:05:29:06 - 00:05:48:29

Unknown

We've also pointed out that the breadth of job gains just hasn't been there with areas like health care really responsible for a large chunk of the gain. So we're in this sort of no higher, no fire zone, getting closer to, you know, a little bit more weakness there at the margin.

 

00:05:48:29 - 00:05:50:16

Unknown

I give it kind of a check.

 

00:05:50:16 - 00:06:15:00

Unknown

But the other thing that we want to think about is, you know, other parts of the economy, and we're seeing the Economic Surprise index, which had held in pretty well, starting to roll over a bit in the United States. Just thinking about last week, things like retail sales falling, consumer sentiment took a turn down. So we want to be following that really closely as well.

 

00:06:15:02 - 00:06:38:25

Unknown

But you know, so far a Goldilocks environment. And I know that we'll we'll get to this is kind of the perfect scenario as it relates to the Federal Reserve. When things are too hot, the fed potentially has to tighten financial conditions. We're not there when things are too cold. It means that potentially a contraction and economic activities is happening or a recession and we're not there yet.

 

00:06:38:25 - 00:06:45:15

Unknown

So it's also a really good environment for stocks. And that's something that we think has been pretty supportive.

 

00:06:45:18 - 00:07:01:24

Unknown

One thing has been really interesting is I think it's even the last five, maybe more years, we've taken things we've used to look at as signals for the economic growth. Right. Like leading economic indicator index. So used to be a perfect indicator. I know it's one of the fairest charts, one of mine as well. And it doesn't work.

 

00:07:01:24 - 00:07:21:03

Unknown

And then now we're looking at retail sales. And maybe even that changes as the drivers of economic growth are to shift. AI is such a great provider of economic growth, and people are looking at the span of the hyperscalers. And it's not just about the spend, but how it's transitioning eventually through the economy and work its way through.

 

00:07:21:04 - 00:07:33:17

Unknown

It used to be like, you know, when you build houses, it creates like five jobs. Building a data center is going to be probably create more than jobs than that. And we're just going to wait for that. Matt, where are you seeing this this AI spend contribute to the economy.

 

00:07:33:19 - 00:07:56:00

Unknown

Yeah. We're seeing a manufacturing renaissance. And manufacturing is really tied to industrial companies that are building out all those data centers. And in the United States, there's about 4000 data centers. So that's I mean by far the most in the world. And the thought is that we're just going to keep going. You know, maybe that's a little optimistic in terms of how much building we're going to need to do.

 

00:07:56:00 - 00:08:14:25

Unknown

But you know, when you think about AI and I kind of use this analogy of when the internet was first starting and, you know, when you used to go onto like a modem and it would be like you would hear that noise, it was like a scratchy noise and it would be like, you know, it'd have like the I don't know, the

 

00:08:14:27 - 00:08:15:24

Unknown

you got it.

 

00:08:15:25 - 00:08:36:22

Unknown

But like, you know, it would just be like you'd be waiting and waiting just for the internet to start up. And it's hard to think about that now. So when you use AI right now, a lot of times it'll say like it's thinking like it'll take a minute or two, not like a couple of minutes, but like, so what's happening behind the scenes is this massive need for computing power.

 

00:08:36:24 - 00:09:02:13

Unknown

Like if you want something from AI, it takes a lot of computing power. So basically the back end of that is what is the biggest engine of growth in the world. And you know, we talk about like housing as housing used to be the economic cycle. Now it's like AI and technology and it's this massive super cycle. And so manufacturing booming.

 

00:09:02:15 - 00:09:38:20

Unknown

It's not a big part of the economy, but it's out. You know, pound for pound is doing much more than usual. And you know so the manufacturing ISM index is about 55. I mean that is amazing growth. That is basically the best growth in 20 since 2021. But just kind of going back to the lie to, you know, Kev and thinking about this kind of environment, it's been really interesting to see if you ask a business or if you ask a consumer what they think or feel, it's been almost the opposite of what they do.

 

00:09:38:21 - 00:10:03:13

Unknown

And this has been one of the most tricky parts from an economic cycle standpoint of this post-Covid world, because consumers are saying, you know, we're really struggling and yet they're spending like they never had before businesses before. We're saying, all right, we're not doing well. But industrial production was booming. Now they're saying things are great. Industrial production is just okay.

 

00:10:03:14 - 00:10:30:20

Unknown

So it's been really tough. But we continue to look at the hard data. You just got to focus on what the people are doing or businesses are doing. We're seeing massive CapEx. So that's capital expenditures by businesses. Eyes like the sun and everything around it is orbiting. That's how just important AI is to the global economy. But nonetheless, it's creating a manufacturing boom that is one of the best in the history of the US economy.

 

00:10:30:22 - 00:10:52:08

Unknown

And you're seeing also the Canadian impact. You said globally here in Canada, we're just starting to see that we were on the, you know, in a recession to take a course of negative GDP growth going back to the fourth quarter and the first quarter of fourth quarter, 2025, first quarter, 2026, we're starting to see a turnaround. And one of the aspects is it really is we're starting to see data centers being built here.

 

00:10:52:10 - 00:11:09:13

Unknown

We're starting to see, you know, shovels on the ground job creation there. So it's you know, as you said, I think it was one of us as well as like the the sun and other countries are benefiting from it. And as a rising tides impacts there. And manufacturing indices have really turned around and started to show some support there.

 

00:11:09:13 - 00:11:30:01

Unknown

So we think overall I would say global economy is fairly healthy. There's always going to be pockets here, weakness and choppiness here and there. But we're I barely I'd say not even two years from a lot of talk about the big R word recession. And I think we've muddled through that soft landing or not, whatever we want to call it.

 

00:11:30:01 - 00:11:49:00

Unknown

But if things look pretty strong, pretty solid, shall we say, around the world from an economic perspective. So that's a good news. And Emily, I think you said it was, well, the key to when we start off with for the big top level okay, what's the economy doing if it's doing well great hazard read through. And as you said it's supportive equities.

 

00:11:49:00 - 00:12:17:14

Unknown

Right now Sp500 is doing strong. Global markets are fairly solid if not spectacular halfway through the year. Or are we up in the in the low teens across major indices around the world Japan up over 30%. So just some phenomenal returns there. But the key I think from the US now is coming to the year. It was valuation valuations is stretched extended highest that we've seen since a tech rack or tech bubble.

 

00:12:17:14 - 00:12:38:04

Unknown

And people were fearful about that. But valuations moderated because earnings are solid. And Matt I know you talk about earnings all the time. And this is the good news is we're finally seeing the the earnings start to play out would be the drivers return. So where are you seeing now. And you think those earnings expectations can continue. And we're going to continue to see the same results through the end of this year into next year that we saw so far this

 

00:12:38:07 - 00:13:05:12

Unknown

So energy sector, I want to highlight that because it's not just a US phenomenon. It's a Canadian one as well. And earnings growth there is nearly 100%. And yeah right. Well you know higher oil prices is part of it. And the demand of energy resources to power these data centers is all part of that. So you've got on one side the old economy.

 

00:13:05:12 - 00:13:31:07

Unknown

They're growing earnings at solid double digits. Financials as well because the markets are doing so well. And then you get the new economy. So semiconductors and technology they're still growing earnings. And it's just this you know great combination. And overall the MSCI Canada Index they're showing earnings growth in Q2 of 30%. And the S&P 500 it's nearly 50%.

 

00:13:31:07 - 00:14:01:08

Unknown

Now some of that 50% is like equity gains. So they invested in private companies that show this huge gain. And that that magnifies some of the earnings growth. But nonetheless stocks follow profits. We are amidst one of the biggest profit booms I've seen in my career around the world. And it's not just the US. And, you know, it's almost like the great market rotation of 2026.

 

00:14:01:10 - 00:14:30:07

Unknown

It started in 2025. International stocks and non-U.S. stocks really picked up the pace. But 2026 I mean this is the broadest best rotating market I think I've seen. I mean, large growth in the United States is only up like 5 or 6%. Everything else on the planet is up, you know, significant meaningfully more. And so strong earnings is the best news for equity investors.

 

00:14:30:09 - 00:14:43:24

Unknown

And it's really a lot stronger than, you know we kind of talk about the economy. It's like it's okay. It's Goldilocks earnings are strong. And I think that is been the biggest bright spot for stocks.

 

00:14:43:27 - 00:14:47:27

Unknown

We have great support for for earnings and now it's done well. And it seems

 

00:14:48:00 - 00:14:52:11

Unknown

companies it continues to be a show me story because if you as an individual company

 

00:14:52:13 - 00:15:05:05

Unknown

beat expectations, I would say not meet expectations but beat expectations and improve guidance above expectations. Your stock price is getting punished. We seem so positive here. And of course we're very constructive markets.

 

00:15:05:07 - 00:15:19:04

Unknown

Emily, can you be the kind of the opposite side play the devil's advocate here. What if we're wrong? What can go wrong here. Can earnings continue. Like what are which would be careful about. And how should we be playing that in our portfolios.

 

00:15:19:07 - 00:15:47:17

Unknown

Yeah. And when you just said expectations I thought about Great Expectations English class I I'm sorry I love a theme. I'm just going to keep going with the theme. But what's happening right now to sort of put it all together is that you've got these two mega forces that are set to potentially collide on one side of the page, you have these massive hyperscalers who are telling us that they just are going to have a blank checkbook.

 

00:15:47:18 - 00:16:12:11

Unknown

So they're issuing debt. They're issuing equity. Like the need for liquidity has never been greater from these companies, which used to just have a ton of cash. And now some of them are have negative free cash flow. So it's pretty remarkable to watch. On the other hand, you have central bankers globally that are set to potentially drain liquidity from the system in the form of hiking interest rates.

 

00:16:12:12 - 00:16:13:21

Unknown

So

 

00:16:13:24 - 00:16:40:03

Unknown

think about these two things happening. Massive need for liquidity, potential draining of liquidity. We think that's sort of the the challenge to all these great things. Like we've been describing this as an equity bull. Investors dream scenario. All the stuff Matt talked about explosive earnings growth and impressive diversification, this great rotation and frankly a bit of a lack of euphoria.

 

00:16:40:03 - 00:17:12:13

Unknown

In fact we talked about valuations earlier. They've come down. We started the year around 22 times. Forward earnings were just over 20 now. And the reason for that is because the denominator is math class. The denominator is so good that some of these stocks are trading at single digit multiples now. So all these great things are happening. But when great things are happening, usually it means growth is accelerating and potentially as a side effect, inflation and those things.

 

00:17:12:14 - 00:17:40:11

Unknown

Of course would lead the fed to hiking. It's not our base case scenario that we have this massive conflict. We think that the equity market and the economy could handle a hike, which is exactly what's now being priced into the bond market. But if for some reason it's 2 or 3, then we think we've got a problem. So I would say that is the biggest risk that's on our minds as we contend with the back half of the year.

 

00:17:40:16 - 00:18:03:27

Unknown

I'm a big fan of math class. I love that you pointed out. People understand that when we look at ratios, it's just a fraction and you have a numerator denominator. And I think that's where I'm not saying worried at it right now. But when you have a price earnings multiple fall on a four basis because earnings expectations increase my worries always is expectations be great.

 

00:18:03:27 - 00:18:25:22

Unknown

What if they don't get a or exceeded. And and we don't know when that plays out. Might never play out right. We might not be in bubble territory, might not collapse or pop. But what if we start to see a slowdown in earnings growth, especially on the capital expenditure side? And that's where when we look at things, I think it's also important to be diversified and say, listen, yeah, I want to own AI.

 

00:18:25:22 - 00:18:42:12

Unknown

I want to own some of these these hyperscalers. I want to own these companies also at the right price to pay for them, but also be diversified elsewhere. And one of the greatest things, you know, great things that, Matt, you said probably a year ago or so that I've keyed on is when we look at diversification, especially globally, everyone thinks, oh, I want to be different.

 

00:18:42:12 - 00:19:02:00

Unknown

Like globally. A lot of talk about emerging markets now. And what you said was it's not about countries, it's about companies. And I think that's key here is where when we're looking at diversification, we got to kind of throw out the old textbook about diversification where I have a line item of international I got us, I got line up for Canada, I got a line up for emerging markets.

 

00:19:02:02 - 00:19:23:24

Unknown

It's more about Kate, where am I invested? Because I can go to emerging markets now and used to be all about China and Chinese economic growth. Now Taiwan and South Korea have equal weight 30% in the emerging markets Index as China does. And those two countries, Taiwan and South Korea, really just three stocks, which happened to be also AI linked stocks.

 

00:19:23:24 - 00:19:45:20

Unknown

So your game diversification and emerging markets. But you're still linked to the exact same product or performance or asset class in the US. So you're not getting true diversification there. And that's one thing that a lot of investors need to make sure they're looking at as we go forward next year or so as this whole place technology shift plays out, a lot of uncertainty there.

 

00:19:45:20 - 00:20:03:00

Unknown

It's going to be a great, great ride. But we also have to make sure we're we're aware of things that might come out of nowhere and make sure we're well diversified from that perspective now. And when you talk about inflation and talk about the Federal Reserve kind of front running the syllabus here, but it's okay. It's always good.

 

00:20:03:02 - 00:20:26:09

Unknown

But that's a key here. And I think rising rates as we've seen that impact. You talked about liquidity. There's an expectation that one of the reasons or talk right now. But why perhaps the US Treasury yield curve especially on long and is moving higher is because some of these buyers of debt are going towards the corporate credit issuance of these hyperscalers.

 

00:20:26:09 - 00:20:46:23

Unknown

So there's kind of this this battle for limited buyers of debt. And perhaps the government bond side is is missing out because someone, even bond investors are gravitating to to AI, how much they're spending out there and issuing debt to to solve their, their liquidity issues.

 

00:20:46:25 - 00:21:09:19

Unknown

We look longer term and we we, we actually get excited when bond yields back up like this because there's a better entry point. And even at the very long end of the curve, Matt and I were just talking right before we hopped on here. Lake is starting to look kind of interesting, even though you would have to write size that position because there's obviously more volatility inherent there.

 

00:21:09:22 - 00:21:37:09

Unknown

But this idea that you can get, you know, in the US, 5 to 6% yield and a high quality bond to us, you know, makes is a pretty attractive place to go. And I think this idea of sort of letting bonds do a little bit more heavy lifting in portfolios is something that that we're looking at now. The challenge that that we have is that, you know, and I actually kind of like this, but nobody wants to talk about bonds.

 

00:21:37:11 - 00:22:03:04

Unknown

You know, there's so much risk that's being taken right now. There's so many, you know, new shiny new toys that that investors are looking at that they're like it's kind of like, what have you done for me lately when it comes to fixed income? Because we've been in this environment where bonds have had a really tough run, especially in 22 and and into 23, it's it's gotten a little better over the last couple of years.

 

00:22:03:04 - 00:22:30:05

Unknown

But you know bond enemy number one is inflation. And that just absolutely wreak havoc on portfolios. And now we have this this gift which is that we've got yield which is something that we haven't had for for most of our careers. So we would look at backups opportunistically here. Bonds are kind of dazed and confused right now. They're sort of their focused on, you know, bond vigilantes, worries about the deficit.

 

00:22:30:06 - 00:22:54:17

Unknown

You know, what's going on in Japan with yields there. You know, this kind of raw lack of not lack of communication, but like lack of truly understanding what Chair Warsh is saying, I think is, you know, certainly less forward guidance is an issue. But what really matters to bonds is inflation and growth. And there is disinflation in the pipeline.

 

00:22:54:19 - 00:23:17:01

Unknown

We look at the shelter component of CPI, for example. It's about it's a meaningful component of CPI, about a third. And it's it's meaningfully slowing. We just got fresh data suggesting that home prices are up about 1% year over year. Now the BLS says it's over 3%. But the way they calculate it, we use real time measures of housing.

 

00:23:17:04 - 00:23:50:10

Unknown

You know how and prices are up 20% in 2022. We're talking about 1% apartment rental prices, less than 1% year over year. And the labor market, it's not great. And the bond bonds just aren't really sniffing that out right now. We think once they wake up to it that there's there's an opportunity to benefit from the total return, potentially, that's inherent in high quality bonds not only grab a hold of the yield, but also start to potentially see duration as a tailwind.

 

00:23:50:11 - 00:24:04:17

Unknown

Now know most people won't do it, because our research shows that people tend to sit in the ultra short, in the short end of the curve and money market funds all the way until interest rates get pretty close to zero and then they buy bonds.

 

00:24:04:17 - 00:24:07:17

Unknown

So we're just encouraging that behavior to start. Now.

 

00:24:07:21 - 00:24:10:12

Unknown

You know, the time to repair the roof is when the sun is shining.

 

00:24:10:12 - 00:24:19:14

Unknown

That was JFK. Now we're in history class or government. And that's really what we're thinking about as it relates to fixed income piece.

 

00:24:19:17 - 00:24:36:20

Unknown

I think it's interesting as well, because inflation has been problematic in almost the calculation where every time I'd say even going back to Covid, just when you thought you were going to get disinflation forces in the mathematics of the rolling over of the first, you know, cause of inflation. Because just back to math, I love math. It's a year of year calculation.

 

00:24:36:20 - 00:24:59:07

Unknown

It rolls over every month. So if you start to see the the impact of the first factors inflation roll over inflation is to slow not paying deflation but just disinflation, lower inflation. Then you get something coming up that has a little piece of the pie and causes some more inflation. And or or these steadies. Inflation keeps it at a, you know, you know, the stickiness of inflation is becoming a technical term.

 

00:24:59:07 - 00:25:25:10

Unknown

Now, no one we never use sticky as part of our lexicon in strategy terms ever before. But now it is. And I think that's that's one of the issues. And we're not too far gone from material cuts by the Federal Reserve. And now we're talking about back to hikes. And that has caused an issue, especially as investors going back to education don't understand really fixed income.

 

00:25:25:10 - 00:25:41:07

Unknown

And that's problematic because they think that they see their statements. And why am I bond funds not returning anything. It's like well income is paid out through the year and you have to be very patient for fixed income and you have to be there. As you said before, it moves because otherwise duration doesn't work. So that math doesn't work.

 

00:25:41:08 - 00:25:52:13

Unknown

And it's it's tough when equity markets are all time highs. And fixing them is just, you know, giving you a little income, but they're there when you need it to. So that's it's important part of it and understanding there. And I think it's a lot of

 

00:25:52:15 - 00:25:57:19

Unknown

why we need active management on fixing a more so than just looking at passive fixing them as well.

 

00:25:57:21 - 00:26:16:27

Unknown

So that's interesting. I know you're talking about interest rates as well and income. What are you seeing on the corporate credit side in the US? I think right now it's probably corporate credits. One of my favorite areas, not just in the US but but globally. We're seeing the opportunities there. And you know, I know spreads are all time tights, but we'd be worried there.

 

00:26:16:27 - 00:26:19:20

Unknown

Or should we just be taking advantage of the income where we can take

 

00:26:19:22 - 00:26:32:03

Unknown

At the end of the day the the high yield bond index has gotten higher quality over time. The earnings power cash flow of the company.

 

00:26:32:06 - 00:26:59:00

Unknown

I know like it's actually really improved the the credit quality and the ratings have moved up. You know, energy is the biggest sector in the high yield space. And energy companies are growing earnings the best they have in years. Materials is another one. We've got utility type companies. Again the power generation is helping. And then in terms of corporate credit just across the board.

 

00:26:59:01 - 00:27:30:09

Unknown

Yeah I mean spreads are tight. But the absolute yield is 7% on on high yield on investment grade it's five. And if we're sitting you're saying can we do 5 to 7% in a kind of broadly diversified corporate bond portfolio. That's pretty good. I mean, like, you know, I guess I think about old, old time, you know, kind of like liability matching or, hey, if you're retiring and you want to have an income stream, you know, if I rewind ten years ago doing this.

 

00:27:30:12 - 00:27:59:14

Unknown

It was like, all right, I can do 2 to 4% for you. Now we're doing 5 to 7. But again, as Emily said, people don't really like it. I think what is really, you know, and it's not been anything about the corporations but bonds, as you said, Kevin, aren't doing great. And to me, you know, Warsh, the new fed chairman here, it's like having a teacher come in and you have no idea what they're going to test you on.

 

00:27:59:15 - 00:28:16:02

Unknown

They don't really give you any guidance. You just sit in there and they just talk randomly. And then you're going to get a quiz or a test at the end of the week, but you don't know what's going to be on it. And you're like, this is not helpful. I don't like this class. Like that's usually what I'm like.

 

00:28:16:03 - 00:28:36:16

Unknown

I'm going to try to transfer to another teacher, but it makes he's leaving all this uncertainty. And like you said, Kevin and and Emily, the longer end is is going up. And, you know, I think that is something that you can't just sit there and because all the students, all the bond investors sitting here being like, I don't know what you're doing.

 

00:28:36:19 - 00:29:10:13

Unknown

Like the data should have suggested a lower Treasury yield. If you said, all right, weak jobs report, softer inflation, softer PPI, softer retail sales. And yet yields are up. So something isn't adding up. And I do love math class because usually it does mean you could add it up and make some sense out of it. But I think is going to have to he's going to be almost forced because so many people are going to be like complaining about his teaching style, that the next couple of meetings, I think he's going to have to say, because right now, the bond market saying you're going to hike by the end of the year.

 

00:29:10:13 - 00:29:28:03

Unknown

And if this data keeps coming, I don't know if that's the right answer. So that's, you know, it could change quickly. And as Emily said, these yields are pretty attractive either way. But I would take a, you know, take a look at it for the next couple of months.

 

00:29:28:05 - 00:29:29:10

Unknown

Finally, a good news story there

 

00:29:29:18 - 00:29:30:09

Unknown

if the

 

00:29:30:09 - 00:29:47:19

Unknown

data comes in the software. But markets expect more rate hikes and don't get them. That's when it starts making sense for for bonds. And I think we're such in the opposite thing where the surprise was the upside which of course hurts bonds as yields go up prices come down. So that's been an issue there.

 

00:29:47:19 - 00:30:11:10

Unknown

But overall I think we're going to wrap it up. We got the economy of a B b plus for Emily. You said in the US I would say it's in Canada. It's it's improving. It's you know the first semester wasn't great. But we're seeing from from a deed to a C. It's starting to get better but some improvements to be made still there equities Matt.

 

00:30:11:11 - 00:30:14:28

Unknown

So for us you're giving them a giant A+.

 

00:30:15:01 - 00:30:24:10

Unknown

I think the valuations are still there. But we'll give it a name. So if you're a perfectionist there's still a little bit better. But it's good.

 

00:30:24:13 - 00:30:29:13

Unknown

equities and fixed income is I think it should always be. What do you think Emily.

 

00:30:29:15 - 00:30:31:14

Unknown

Fixed income a.

 

00:30:31:16 - 00:30:50:19

Unknown

A+ okay I was going to just a steady B just kind of middle road. Give me my income. That's fine. No expectations passing grade. You don't hurt or help my portfolio. But you're always there to to play a good role right in the middle. And I think that's where you should be. But ultimately right now, I think the big story really is we're constructive.

 

00:30:50:20 - 00:31:15:00

Unknown

Nothing should be feared. But at the same time, we should be diversified in case things don't play out the way they should. And you want to have a fixed income, your portfolio as well as many some alternatives to help for that, that volatility aspect of the equities and be diversified by companies, not countries. Make sure we're properly diversified going through the exposure of business risks, to make sure we're not extending ourselves and focus on just one subject.

 

00:31:15:00 - 00:31:29:27

Unknown

Make sure we're perhaps doing well in all of them across the the exam, across our our report card. So, Matt, Emily, I want to thank you so much for joining us today. This has been a lot of fun. I wish we could talk about this for for hours, but I think our investors were our listeners were eventually get to get bored of us.

 

00:31:29:27 - 00:31:32:01

Unknown

So but I want to thank you so much for joining us

 

00:31:32:08 - 00:31:33:00

Unknown

Thank you.

 

00:31:33:02 - 00:31:33:26

Unknown

Thank you.

 

00:31:33:28 - 00:31:58:07

Unknown

So for Investors Unplugged and for Matt and Emily, this is Kevin Hedlund. Thanks so much for joining us. For those who are listening and enjoy it, please rate us on any podcast player. And if you enjoy it and think any of others would like to enjoy it as well, please let your colleagues, friends, clients know where to find us and hopefully we'll hear you, listen to you or talk to you soon over the next couple of months.

 

00:31:58:07 - 00:32:03:20

Unknown

So thanks very much for listening. Take care.

 

00:32:03:23 - 00:32:30:02

Unknown

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