ALI McCARTNEY JOINS US

YOU'VE BEEN PRETTY CAUTIOUS, ALL

OF LAST YEAR, REALLY, ON THE FED

HIKES AND THE ECONOMIC FORECAST,

ARE YOU TELLING YOUR CLIENTS

ANYTHING DIFFERENT TO DO RIGHT

NOW?

>> I THINK IT IS A BIG THING

THAT HAS CHANGED IS THAT IT IS

2023, NOT 2022

AND ALTHOUGH FOR ALL OF US

HAVING GONE THROUGH ONE OF THE

WORST YEARS IN THE HISTORY OF

BEING AN INVESTOR, IT IS REALLY

TEMPTING TO WANT TO COLLECTIVELY

EXHALE AND START TO LEAN INTO

MARKETS AND THINK POSITIVELY

NOW, YOU WERE JUST TALKING ABOUT

THE OPTIMISM FUELING THE LAST

COUPLE OF DAYS OF TRADING, THE

BEGINNING OF THE YEAR.

AND MIND YOU WE ARE ALMOST

EXACTLY A YEAR OUT FROM THE

HISTORICAL HIGH ON JANUARY 3rd

LAST YEAR AND THAT'S BASED IN

THE STEEP DECLINE WE SAW IN THE

ISM NUMBER, THE EARLY SIGNS OF

MODERATING INFLATION, MOST

SPECIFICALLY AND MOST IMPORTANT

THE HOURLY EARNINGS.

THAT IS MODERATING

AS YOU SAID, IT IS COMPLETELY AT

ODDS WITH WHAT THE FED IS

MESSAGING TO US.

AND SO WHILE I CAME ON A NUMBER

OF MONTHS AGO AND SAID,

UNFORTUNATELY I THINK IT IS

EARLY FOR A PIVOT PARTY, I THINK

IT IS STILL TOO EARLY FOR A

PIVOT PARTY.

I THINK INVESTORS, IT IS GREAT

TO BE OPTIMISTIC, AND I THINK

WE'RE GOING TO HAVE MORE CLARITY

THROUGH THE NEXT EARNINGS CYCLE

AND THROUGH THE NEXT TWO FEDERAL

RESERVE AND GPI PRINTS

BUT MARKETS AND INVESTORS ARE

FAMOUSLY FICKLE AND FRAGILE AND

I THINK THAT STAYING DEFENSIVE,

BUILDING CASH, LEANING INTO

QUALITY RIGHT NOW WITH A

SHOPPING LIST IS THE WAY TO GO.

>> SO, LET'S TALK ABOUT THEN

WHAT THE STRATEGY SHOULD BE.

SHOULD YOU STILL BE LEANING

DEFENSIVELY AND IF SO, WHAT DOES

THAT LOOK LIKE

CASH, IS IT UTILITIES, WHAT DO

YOU LIKE

>> FIRST OF ALL, I THINK YOU

LOOK AT FIXED INCOME, I THINK

YOU HAVE TO PUT CASH NOW BECAUSE

OF THE LEVEL OF RETURNS IN THE

SHAPE OF THE YIELD CURVE IN THAT

BUCKET

AND SO IF YOU ARE AN IDEAL WITH

LARGELY EXTRAORDINARILY TAXABLE

INVESTORS, AND YOU CAN GET THE

KIND OF RATES, STATE AND LOCAL

TAX FREE YOU CAN NOW FOR

SHORT-TERM TREASURY PAPER,

THAT'S SUPER INTERESTING AND IT

BUYS YOU SOME TIME TO SEE WHAT

HAPPENS AND WHAT HAPPENS WITH

CREDIT SPREADS IN THE MARKET

IN ADDITION ON THE ACTIVE SORT

OF -- LOOKING FOR EQUITY

EXPOSURE, WE LED -- YOU LED THE

SEGMENT TALKING ABOUT HEALTHCARE

MORE IN CONSUMER DISCRETIONARY,

BUT WHEN YOU'RE TALKING ABOUT

HEALTHCARE, THERE IS A PLACE YOU

CAN HOPEFULLY HAVE YOUR CAKE AND

EAT IT TOO

WE'RE TALKING ABOUT FROM A

DEMOGRAPHIC PERSPECTIVE, ONE OF

THE FASTEST GROWING DEFENSIVE

SECTORS THERE IS

FROM A VALUATIONS PERSPECTIVE --

>> I'M SORRY

WHAT WERE YOU GOING TO SAY.

>> RELATIVE TO THE BROADER

MARKET AND OTHER DEFENSIVES, IT

IS STILL UNDERVALUED AND THAT'S

A PLACE YOU CAN LEAN IN DURING

WHAT MIGHT BE A POTENTIAL

DECELERATION AND RECESSION, BUT

ALSO EVEN INTO ALL THE POSITIVES

THAT WE'