Eric Friedman, China, Bonnie discussed on Bloomberg Markets
Your customers are the most important thing about your bank. How are they doing out there? Bonnie. Thanks so much for having us on. You know, I'd say that people are doing well. All things considered. It is a time of bobbing and weaving if he will, given the circumstances, but I'd see that in terms of access to capital in terms of the demand for for liquidity, things were flowing quite well. Of course it fits and starts like like in any business, But I think that by and large, we're seeing really pockets of strengths and some geography is in some industries in and as I think mentioned in the earlier segment, also some challenges as well. But on balance things are are very, very much class have full All right. So Erica's You think about your portfolio give us a sense of how you're positioned right here. There's some obsolete tech stocks have been just been pushing at the indices higher. Some concern about a lack of breath in the marketplace. How are you viewing things? Well, we think that's a big issue, and our strategy has been Teo to use the vernacular feed the Ducks a bit on technology, looking to sell on strength again a day like today, when you see just a continued Upward momentum in the NASDAQ composite of NASA 100 Relative, Tio, it's domestic counterparts, but also most notably their international counterparts. That's been a significant disparity of performance between domestic versus non non US and so we've had more of a U. S bias, which has worked But we think that as we keep repelling higher, we have been taking some of our large cap technology off the table Investing Maurin mid and small cap and a little more in emerging markets, but less so in developed international. It's still a source of funds for us. Right now. So what's China hasn't developed international or is it in emerging markets? It's still emerging market. But I think it's an important point, Bonnie that it has to really get to really decouple separate out your emerging markets exposure. And, of course, we, like many investors are skeptical about the headline data We get from China. But based on the factory orders as well as we were hearing from from company reports. China's doing pretty well right now, So we do think that's a place where investors can can retain some footing, but other places were still more prove it. Area's particularly Latin America, as well as other parts of non Japan Asia. Those air those air spots that we still think you need to see some momentum before getting more excited about Ford prospects. So, Eric, How about on the fixed income side here? We've had a lot of news just in the past week from Fed chairman pal about how the Federal Reserve is thinking about inflation. How are you guys position ourselves on a fixed income side? Well, we thought that last Thursday's statement from the Fed with meaningful and we're really more willing to take on a touch more credit risk than we had been, But we prefer to have that quote unquote full faith and credit mentality within our bond portfolio, So we're still believers and owning some some longer duration Treasuries. I know that in the earlier guest had hats and worthwhile thoughts there. We think that if you get that risk ofthe moment if you see challenges with back to school or challenges, with the election owning some long duration convicts city, which is just a fancy way of saying that we want to own some Some assets that will will go up in value. If that growth scare materializes. So we still think owning some Treasuries makes sense. But we are inching into corporate credit. We still think the better place to take on risk isn't global equities over fixed income right now. But again, taking in a little more corporate credit risk, we think makes sense in this environment. So given what you've just said, I have to ask you about Warren Buffett buying financials in Japan. You know when I mean a lot of what you said, is consistent with that, right? Is that something you'd be interested in? Or what do you make of that called? By Warren Buffett. You know, Bonnie, I think there are a number of things out there that you almost have to take on a private equity type of mentality in terms of when they might work. I think Japanese equities certain consumer centric sector's think of those sectors just have not done very well. They've had a bit of a bounce since the march 23rd lows, but think of hotel stocks. Think of Travel. Those are eventually going to work for people like us. But of course clients measure results versus benchmarks. Gonna make sure that that were obviously keeping up to stop the hopefully exceeding Uh, you know, we can't just wait for that to work out indefinitely. Those that have a little more patients and add a little longer time horizon. I think opportunities like that Make a ton of sense in this environment. A couple real quickly here on real assets. I'm thinking about gold here, pushing up against $2000 per ounce level. How do you guys think about gold here? So on our model's Paul Gold is about 23% expensive relative that where we'd be more interested. We look at things like Central Bank balance sheet size as well as other base metals. And so we think it is, of course, a non cash flowing asset, but We want to probably see it come in a little bit more before getting more aggressive, But we do think that, given the likelihood of ongoing a central bank support an asset markets that gold is a worthwhile part of the portfolio. We just like to own it a little bit lower than where trading right now. Yeah, it's fascinating, and then you know other commodities as well. Would you have some interest in or particularly gold because ifit's particular properties To the thing that we're doing the broad real asset category Vanni that were struggling with a bit here is howto Think about realestate just because it has a lot of properties that we like In this environment. It has a a deflation hedge. It has a degree oven inflation hedge as well. But we're just not sure about how corporate footprints may materialized. So we do think that as negative interest rates persist, which we think will happen both domestically as well as internationally that you want to own cash flowing assets, so that would be really our primary goal. But we do think that real estate just given some of the potential volatility in cash was in what rent rolls may look like. That's a little less of a focus for us right now. We think that if you had to be involved in space that the gold is probably the most interesting thing just went on a little bit little cheaper. Eric. Thanks so much for joining us. We appreciate Eric Friedman, Chief investment officer. U S Bank Wealth management Right now, let's sit.