FOCUS 2026: Q4 asset allocation playbook – David Wolf, David Tulk, Ilan Kolet

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Subtitles are AI Generated

 

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Wow.

 

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Fantastic. Fantastic to see everyone here.

 

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A lot of familiar faces in the crowd.

 

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Thank you all for joining.

 

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It's going to be a wonderful couple of days.

 

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A lot of stuff to get to and the clock's already ticking

 

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so let's dive right into it.

 

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DW, which is David Wolf, by the way.

 

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Yields have pushed a lot higher.

 

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Why has that happened and why should we care?

 

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Let me first welcome everybody as well

 

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and also mention we are

 

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happy to take audience questions.

 

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I think there's an app that you can put in your questions.

 

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We really need this because if we run out of questions

 

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at the end Ilan has threatened to show off

 

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the line-dancing moves that he learned last night.

 

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Trust me, nobody needs to see that--

 

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Nobody wants to see it.

 

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--so we're happy to to take any of your questions.

 

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We're gonna start with bonds, which is not

 

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usually the place that we start.

 

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It tends to be the less interesting part

 

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of asset allocation part of our portfolios but that's where

 

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the action has been in recent weeks.

 

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I'm going to unpack that, I'll take a few minutes to do

 

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that. First of all, we have been concerned

 

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for some time, I think, as a lot of folks in the audience

 

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know, about risk to the bond market and in

 

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particular in the US.

 

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We eliminated all of our

 

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direct holdings of US Treasuries towards the end

 

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of last year and we've been through this year selling down

 

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more broadly our US fixed income holdings.

 

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That's helped cushion us to some degree in what's been a

 

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pretty savage bond sell-off.

 

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As you know rates were really, really low for a really long

 

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time. We had them normalized to 10-year

 

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yield of about 4% in 2022 and they kind

 

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of there more or less for some time.

 

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They've ripped up to about

 

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5 1/4% over the past several months, half of that

 

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just in the last few weeks.

 

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There's been a lot of kind of gnashing of teeth about

 

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this so let me break down exactly what

 

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we think is happening and what the consequences

 

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are.

 

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If you think about a bond yield there's sort of three

 

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pieces to it underneath.

 

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There's a fundamental real interest rate piece which

 

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reflects what's happening in the economy.

 

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There's the inflation and inflation expectations piece

 

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which is kind of self-explanatory.

 

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Then there's a risk premium or term premium piece

 

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which is basically a catch-all for things that you

 

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worry about up to and including whether you're gonna

 

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be paid back.

 

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The first insight I'd like to give is, in our judgement,

 

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it's been entirely the first piece of that that's

 

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been driving the increase in bond yields.

 

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It's because the economy is strong and investment is

 

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strong. If you think about where an interest rate comes

 

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from, it's the balance between people who have

 

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money, the savers putting it aside, and the people who

 

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need the financing, those who are going in and building

 

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for the future.

 

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For most of the 2010s we had a lot of savings, Bernanke

 

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talked about the global savings glut, and we had

 

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not a lot of investment opportunities.

 

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Larry Summers I remember talking about secular stagnation.

 

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A lot of supply of funds, not a lot of demand for

 

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funds, price of funds goes down which is the interest rate.

 

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Now we have entirely the reverse.

 

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We have probably the largest investment boom that

 

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any of us have ever seen in our lifetimes with the

 

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trillions going into the AI buildout.

 

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Savings really haven't moved very much so you have this

 

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big increase in demand for funds, price of

 

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funds should go up which is the interest rates.

 

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That is, shall I say, a less worrisome

 

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source of the increase than others

 

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would be, at least for equities.

 

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For bonds it's bad, right?

 

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If you buy a long bond at 4%, it goes up

 

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to 5%, you've lost 20% of your money.

 

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That's just bond math, that's bad.

 

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But it's not necessarily a negative or bad signal.

 

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Well, I mean, if you're

 

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a bond holder it's a negative and bad signal.

 

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If you are an equity holder it is not as

 

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bad because it's coming from ultimately

 

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a reflection of strength in the economy, which is to say

 

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that if you think about stock prices

 

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it's... and I see Jurrien over there who I'm sure will talk

 

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about the dividend discount model and such later

 

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on in the session, but it's basically a stream of earnings

 

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and a discount rate. How much money

 

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a company is gonna make and then how much you discount it

 

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in the future. Bond yields go up, discount rate goes up.

 

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That's just math, right, that's not good.

 

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But the same thing that's driving the discount rate up is

 

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also driving the earnings up.

 

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It's ultimately the strength in the economy.

 

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So numerator up, denominator up, not clear what

 

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happens to price.

 

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That doesn't mean that rising bond yields is great for

 

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equities, it's not, but it's as bad, I

 

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think, as a lot of people fear and it's one of the reasons

 

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why the market has been holding in as well as it has.

 

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I think that it's helpful for you to have unpacked

 

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that because I think a lot of people do view it as a purely

 

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scary signal which it may not necessarily be for

 

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us as multi-asset class investors.

 

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DT, how should we be

 

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thinking about this in the context of the Fed?

 

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Next weekend I'm in Cleveland, not to brag, and

 

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I'm moderating a panel with three

 

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former regional Fed presidents.

 

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How should we be thinking about this?

 

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What are some of the questions I can ask them?

 

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And yes, you're admittedly doing my homework for me.

 

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That was the second prize in that particular agenda?

 

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I think it's interesting with the Fed in particular because

 

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you normally think of ...

 

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when you talk about the bond market your first thought

 

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tends to go to what central banks are doing because they

 

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tend to be a big player.

 

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But as DW outlined, it's more than

 

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that that I think is really driving the bond markets.

 

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It's only natural to think of the Fed and the recent

 

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tightening, and maybe some perspective future tightening,

 

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as contributing to the uncertainty we feel

 

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about the bond market. I guess trying to

 

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unpack the drivers of what the Fed is doing, I think a lot

 

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of the reason why the Fed's is hiking is in

 

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direct response to what's happening in the economy.

 

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That's really what should be happening for a central

 

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bank. When you think about the degree of

 

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building in AI and the amount of

 

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economic growth that that is contributing to

 

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that, I think, is something that the Fed sees the need to

 

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try to tighten policy.

 

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The next question, especially when you think about it in

 

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the context of our overall positioning and how much risk

 

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you want to take within your wider portfolio,

 

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the question is is this likely to be a repeat

 

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of 2022 when the Fed doesn't just hike

 

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a little bit it hikes a lot.

 

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That's in response to inflation that's

 

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quite elevated or that is starting to impact

 

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expectations of future inflation.

 

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Today I think we don't have that

 

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same expectation which is comforting, at least

 

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to us, because we know that business cycles,

 

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they don't die of old age There's usually somebody

 

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out there that causes them to

 

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end. It can be a

 

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central bank and the Federal Reserve in this instance.

 

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The fact that the tightening that we expect I think is

 

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fairly incremental from here does give us a fair bit

 

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of confidence that the wider backdrop, I

 

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think, is still constructive.

 

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Not without risk but it doesn't look like

 

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that classic tightening cycle.

 

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The last point I'll make is that starting points matter.

 

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If you think about the analogy of 2022, you were at

 

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exceedingly low interest rates and you were normalizing

 

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them. Now you're more in a calibration

 

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phase of monetary policy as opposed to having to

 

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really take a lot of stimulus out that had been left in,

 

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arguably, too long.

 

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Interesting.

 

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I want to get to sort of our overall discussion around

 

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equities and regional discussion but just staying on the

 

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Fed for a second, DW, you were in the room for those

 

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interest rate deliberations.

 

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Are we still concerned about political interference with

 

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the Federal Reserve?

 

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Where are your thoughts in terms of

 

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very concerned versus not concerned at all and how

 

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are you thinking about that?

 

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It's a question that I get a lot from clients coast to

 

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coast.

 

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When I was at the Bank of Canada we had zero political

 

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interference, which is the way that we want it.

 

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This was 15 years ago on

 

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the US side.

 

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All of us central bankers would know each other and talk a

 

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lot, partly because we weren't allowed to talk to anyone

 

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else. It was helpful to

 

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have somebody to talk to.

 

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Central banking is an interesting world, maybe we can talk

 

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about that a little bit later.

 

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The Fed folks also were very,

 

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no, they leave us alone to do what we do.

 

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I don't think we can be 100% confident that

 

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that's still the case. That's one of the reasons why there

 

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is a risk that it's not just the

 

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fundamentals, the strength of the economy that lifts

 

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interest rates but that it could be some concerns

 

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about inflation.

 

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I saw the President was talking about, well, we could get

 

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rid of the debt by just inflating it away, which if

 

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you're a bond holder is really scary.

 

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I think a lot of you folks have heard my rant several

 

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months ago about worrying about how

 

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the United States may treat its creditors.

 

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All of these are reasons why we've

 

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avoided the US Treasury market and helped out.

 

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The broader Fed concern, so maybe I'll distill down

 

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some of DT's comments a little bit, if the Fed is

 

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just following the natural increase in rates coming from

 

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a strong economy, which is what's what happening now,

 

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that's okay.

 

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If they decide they need to slam on the brakes because

 

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inflation is getting out of hand, that is not

 

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okay.

 

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It's the first that's happening.

 

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We worry about the second.

 

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But that's a very hard thing to call and becomes a

 

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harder thing to call, to your point, when you have

 

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political interference, potential political

 

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interference, we don't know, which is one

 

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of the reasons why in our asset allocation over

 

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the last couple of years we've been

 

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sort of playing down the kind of top-down

 

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signals that we often use and spending more

 

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time focused on the bottom-up signals.

 

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This is all of the information and research we're getting

 

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from our underlying analysts in equity and

 

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fixed income, our portfolio managers, many of

 

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whom we'll see over the next couple of days,

 

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to really say, okay, if the top-down is imponderable,

 

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whether it's Fed or AI bubble, not bubble, or what have

 

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you, let's just focus on what earnings

 

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are doing because the market is gonna go where earnings go.

 

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Those analysts have kept telling us for the last couple

 

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of years that the market is underestimating

 

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how much these companies are gonna earn.

 

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With that we have retained an

 

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overweight position in equities because again,

 

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our experts are saying put aside rates, put

 

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aside Iran or what have you, the market's

 

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underestimating earnings.

 

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That's really helped us stay overweight equities

 

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through the bouts of volatility and uncertainty that we've

 

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seen. More recently that has frayed a little

 

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bit in the sense that our analysts are still quite

 

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bullish on earnings across the market but it

 

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seems that the market has caught up to us.

 

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With that, and I think we have a slide showing our

 

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positioning, we have taken down our equity posture

 

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a little.

 

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Interesting.

 

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That bottom-up pillar is absolutely critical.

 

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I always say, and we're all trained economists,

 

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what a company is saying and doing today sort of shows up

 

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in the economic data six or eight weeks later.

 

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If we could bring up that positioning slide that'd be

 

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great. DT, let's click in

 

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and let's talk about regionally ...

 

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well, first of all, what are we looking at, and then

 

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regionally how should we be thinking about what

 

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DW talked about in terms of actual

 

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positioning in our largest fund?

 

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How has that evolved from 12 months ago?

 

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Sorry, that's seven questions and you have three minutes.

 

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Okay, go.

 

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All right. Well, let's just jump into it.

 

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This is the chart that haunts our collective dreams

 

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because we look at it, we talk about it quite extensively.

 

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I think most people in the audience are probably familiar

 

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with it as well. It is the active positioning we have in

 

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the Global Balanced managed portfolio.

 

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This is representative of a lot of the positioning we have

 

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across many of our funds so you'll

 

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see these themes rhyme elsewhere as well.

 

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What it shows are the overweights and underweights we have

 

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to various asset classes.

 

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We've added a little bit more detail to get at

 

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DW's point about US Treasuries, which you see on the

 

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bond side of the portfolio.

 

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Sticking to the questions you asked I'll focus just on the

 

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left-hand side which gives you our equity positioning.

 

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I think a lot of the equity positioning that we have

 

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on a regional basis comes down to

 

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the theme of AI.

 

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I think this is a trade or a theme that unites

 

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a lot of different asset markets together.

 

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The one that we think about in the context of the equity

 

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market just reflects the imponderable nature

 

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that DW described when we think AI.

 

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Again, this is a really transformational

 

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technology. We think it does have significant impacts

 

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on the global economy but trying to get the exact magnitude

 

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and the exact timing right is virtually impossible.

 

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We try to draw as much as we can from all of our underlying

 

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analysts. I think we'll hear from Evan later on in

 

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the conference who can give us perspective there.

 

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That's just the nature of this game.

 

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When you think about what we do as asset allocators,

 

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when we face something that's imponderable we wanna really

 

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emphasize diversification.

 

14:18.290 --> 14:21.293

We wanna try to think about the equity at market as

 

14:21.293 --> 14:24.463

giving us a chance to expose the fund

 

14:24.463 --> 14:27.967

to AI, which we think again can be a durable theme, but

 

14:27.967 --> 14:31.103

we also want to have some ballast against that view where

 

14:31.103 --> 14:34.106

we want to an allocation to markets that are

 

14:34.106 --> 14:36.575

less correlated to AI.

 

14:36.575 --> 14:38.611

I'll start with the first group when we think about the

 

14:38.611 --> 14:40.212

sort of more correlated markets.

 

14:40.212 --> 14:43.182

You can think of where action is happening is

 

14:43.182 --> 14:46.252

primarily in the United States and in

 

14:46.252 --> 14:47.620

emerging markets.

 

14:47.620 --> 14:50.823

Emerging markets have certainly evolved in recent years to

 

14:50.823 --> 14:53.959

look a lot like an AI play and it's concentrated in

 

14:53.959 --> 14:55.394

a number of small ...

 

14:55.394 --> 14:58.364

a small number of companies but it has really

 

14:58.364 --> 15:01.367

an outsized impact on the broader index.

 

15:01.367 --> 15:04.470

When we think about the US and emerging markets

 

15:04.470 --> 15:07.673

that's where we want that pro-AI correlation

 

15:07.673 --> 15:10.009

but we can choose within that.

 

15:10.009 --> 15:12.278

There, again, if you're looking at the positioning we can

 

15:12.278 --> 15:14.780

see we're cautious on the US.

 

15:14.780 --> 15:18.083

This is not to say not every US company is challenged but

 

15:18.083 --> 15:21.153

we think that there's more value on the

 

15:21.153 --> 15:22.154

emerging market side.

 

15:23.122 --> 15:25.190

It's just beyond AI as well within the US.

 

15:25.190 --> 15:27.559

We talked a bit about some of the institutional challenges,

 

15:27.559 --> 15:29.561

some of the issues we see with the currency and everything

 

15:29.561 --> 15:33.032

else so that is part of that narrative.

 

15:33.032 --> 15:36.268

That gives us a nice chance to have some choice within the

 

15:36.268 --> 15:39.305

pro-cyclically exposed parts of the market to

 

15:39.305 --> 15:40.339

AI.

 

15:40.339 --> 15:43.242

When we go to the ballast side of the equation where we

 

15:43.242 --> 15:45.844

want to have a little bit more defensiveness, or at least

 

15:45.844 --> 15:48.914

something that's less correlated to AI, this is where we

 

15:48.914 --> 15:51.717

have Canada and the international bucket.

 

15:51.717 --> 15:54.887

You can see that we've chosen pretty

 

15:54.887 --> 15:58.190

decisively to be overweight Canada.

 

15:58.190 --> 16:00.926

I think Canada, for a number of different reasons, has a

 

16:00.926 --> 16:04.196

really nice property in terms of not being correlated,

 

16:04.196 --> 16:07.766

or at least being a very small correlation, to

 

16:07.766 --> 16:09.501

the AI theme.

 

16:09.501 --> 16:12.171

There's a lot of Canada that we'll want to unpack on top of

 

16:12.171 --> 16:14.773

that but at least as we look at that broad equity

 

16:14.773 --> 16:17.843

allocation around the world having that exposure into the

 

16:17.843 --> 16:21.680

Canadian market relative to international

 

16:21.680 --> 16:24.550

gives us that chance to choose within markets that are less

 

16:24.550 --> 16:26.819

correlated to AI. That's an important part of the

 

16:26.819 --> 16:29.388

diversification we want to bring to these funds.

 

16:29.388 --> 16:31.957

That's an interesting discussion. Again, just to be super

 

16:31.957 --> 16:35.094

clear for everyone in the room, when DT talks

 

16:35.094 --> 16:38.230

about being underweight the US it does not mean we've

 

16:38.230 --> 16:41.200

sold all of our US equities, 25% of this fund

 

16:41.200 --> 16:44.403

is US equities and that's being trimmed by about 2%,

 

16:44.403 --> 16:46.405

just to understand exactly what we're looking at.

 

16:46.405 --> 16:48.507

It's an interesting discussion on AI.

 

16:48.507 --> 16:50.042

I'm just gonna hang out on AI for a second.

 

16:50.042 --> 16:52.611

The first rule of AI is always talk about AI.

 

16:52.611 --> 16:55.748

It's amazing

 

16:55.748 --> 16:58.584

we made it 10 minutes in, waiting so long to talk about AI.

 

16:58.584 --> 17:01.887

Before we jump to Canada, DW,

 

17:01.887 --> 17:04.390

can you just kind of give us your thoughts on AI?

 

17:04.390 --> 17:07.359

How do you think about it in the short term horizon

 

17:07.359 --> 17:10.229

and then what are some longer term secular impacts?

 

17:10.229 --> 17:13.132

Of course, I know we wrote a paper on that but a lot of

 

17:13.132 --> 17:16.402

people do ask me on the road about long term implications

 

17:16.402 --> 17:18.937

of AI. Is it so positive that it's negative?

 

17:18.937 --> 17:22.041

How are you thinking about this and then we'll

 

17:22.041 --> 17:23.042

jump into Canada.

 

17:24.843 --> 17:27.846

I think the honest answer is for me and for anyone

 

17:27.846 --> 17:29.848

in the world we just don't know.

 

17:30.883 --> 17:32.151

A lot of people are afraid to say that.

 

17:33.485 --> 17:36.455

You can lay out an enormous

 

17:36.455 --> 17:39.425

spectrum of different outcomes, everything from AI

 

17:39.425 --> 17:42.394

is going to usher in this wonderful new

 

17:42.394 --> 17:45.831

world of higher efficiency and higher productivity, it's

 

17:45.831 --> 17:48.567

going to do all kinds of stuff for us, you're going to have

 

17:48.567 --> 17:51.870

a new phase of economic growth, people

 

17:51.870 --> 17:54.506

won't have to work as much because the AI will do it, or

 

17:54.506 --> 17:57.543

robots, or whatever it is, and that's

 

17:57.543 --> 18:00.779

great. The other side of it, and we've seen a lot of

 

18:00.779 --> 18:03.749

commentary on this, is AI takes over

 

18:03.749 --> 18:06.819

everything, everyone loses their job, and we all end

 

18:06.819 --> 18:10.022

up in camps on universal basic

 

18:10.022 --> 18:13.892

income and there is no economy to grow.

 

18:13.892 --> 18:15.194

Don't sugarcoat it.

 

18:15.194 --> 18:18.230

No, I mean, you can paint both pictures.

 

18:18.230 --> 18:21.266

I don't think anyone can know, we've never seen

 

18:21.266 --> 18:24.236

this before. I gets back to, as DT

 

18:24.236 --> 18:27.206

said, we don't want to make a call on that because we

 

18:27.206 --> 18:30.242

don't think it's responsible for anyone to make a

 

18:30.242 --> 18:33.479

call on it. So we have exposure to if

 

18:33.479 --> 18:36.448

AI works then we have things that are going

 

18:36.448 --> 18:39.585

to work. If AI doesn't work we have things

 

18:39.585 --> 18:42.654

that are gonna be okay and protect us from that.

 

18:43.722 --> 18:46.892

Again, be led by our experts in terms

 

18:46.892 --> 18:50.062

of the bottom-up signals rather than trying to make a hero

 

18:50.062 --> 18:51.964

call on what kind of world we're going to get.

 

18:51.964 --> 18:54.867

Yeah, that's an important element of diversification that's

 

18:54.867 --> 18:57.603

embedded in these funds for our investors.

 

18:58.904 --> 19:01.540

Okay, we're gonna now spend a bit of time on Canada.

 

19:01.540 --> 19:04.643

I will say I spend a lot of my time on

 

19:04.643 --> 19:08.313

the road meeting with many folks in this room.

 

19:08.313 --> 19:10.883

I've spoken in every dimly lit steakhouse in Canada, and

 

19:12.985 --> 19:13.986

there's many of them.

 

19:15.387 --> 19:18.423

This is the part of the thesis where I would say there

 

19:18.423 --> 19:21.059

is a very healthy dose of skepticism.

 

19:21.059 --> 19:24.763

It is the cautious optimism that we have around Canada.

 

19:24.763 --> 19:27.833

I mean, we were underweight Canadian equities, essentially,

 

19:27.833 --> 19:29.101

when you joined Fidelity.

 

19:30.402 --> 19:32.804

That changed pretty meaningfully last year and through the

 

19:32.804 --> 19:34.439

course of last year.

 

19:34.439 --> 19:35.574

So let's talk about Canada.

 

19:36.608 --> 19:37.843

This is on a lot of peoples' minds.

 

19:39.778 --> 19:42.915

Why are we cautiously optimistic on Canada?

 

19:43.982 --> 19:47.085

DW, I'll start with you and then DT

 

19:47.085 --> 19:48.287

I'll turn to you for some thoughts as well.

 

19:49.421 --> 19:52.891

Maybe I'll make a couple of broader comments

 

19:52.891 --> 19:54.660

and DT can dig down.

 

19:55.727 --> 19:58.764

As you mentioned, we were underweight Canada

 

19:58.764 --> 20:02.000

for many, many years. I joined Fidelity in 2013

 

20:03.635 --> 20:06.705

and up until about last year we were underweight.

 

20:06.705 --> 20:10.008

Now, why were we underweight, and that's underweight

 

20:10.008 --> 20:13.545

Canadian equities, Canadian bonds, Canadian dollar.

 

20:13.545 --> 20:16.949

It was because, as we talked about it, a number of these

 

20:16.949 --> 20:20.052

types of events, as we wrote about, in our view

 

20:20.052 --> 20:23.222

the Canadian economy was kind of on a road to nowhere,

 

20:23.222 --> 20:26.658

which is all of the growth that we were seeing was

 

20:26.658 --> 20:29.628

basically consumer spending  which was

 

20:29.628 --> 20:32.831

fueled by immigration and was fueled even more

 

20:32.831 --> 20:35.901

importantly by sort of selling houses to one

 

20:35.901 --> 20:38.971

another and then borrowing off of the equity

 

20:38.971 --> 20:40.973

increases.

 

20:40.973 --> 20:44.042

That does nothing for longer term

 

20:44.042 --> 20:46.979

growth. That's kind of eating your own economy.

 

20:46.979 --> 20:50.215

We've seen a huge shift and it's been a couple of

 

20:50.215 --> 20:53.085

things. Obviously, a different federal government, even

 

20:53.085 --> 20:55.721

it's the same party it's obviously a very different

 

20:55.721 --> 20:59.124

character and a very difference Prime Minister, but also

 

20:59.124 --> 21:01.893

just the pressure that's coming from the United States than

 

21:01.893 --> 21:04.329

the need to diversify ourselves.

 

21:04.329 --> 21:07.399

We've completely reoriented towards

 

21:07.399 --> 21:09.034

a capital investment agenda.

 

21:09.034 --> 21:12.638

We'll see over time

 

21:12.638 --> 21:15.941

to what extent that bears fruit

 

21:15.941 --> 21:19.044

but there clearly is a path to better in Canada

 

21:19.044 --> 21:22.080

economically that hasn't been there for quite some

 

21:22.080 --> 21:25.384

time. One of the things that we know is if we

 

21:25.384 --> 21:28.654

wait for all of that to manifest itself with

 

21:28.654 --> 21:31.623

higher growth and higher productivity, et cetera,

 

21:31.623 --> 21:35.027

we've waited too long. When everything

 

21:35.027 --> 21:37.362

is great everybody knows it's great and the market move has

 

21:37.362 --> 21:40.499

already happened. As our friend Mark Schmehl likes to

 

21:40.499 --> 21:43.769

say, some of the best trades are getting from bad

 

21:43.769 --> 21:46.838

to less bad and we think that we're going from

 

21:46.838 --> 21:49.007

bad to less bad in Canada.

 

21:50.342 --> 21:53.879

It's interesting because that move from

 

21:53.879 --> 21:57.015

sort of very bad to less bad can

 

21:57.015 --> 22:00.719

be a powerful dynamic. The statistic that I often

 

22:00.719 --> 22:03.722

use is, you know, I think

 

22:03.722 --> 22:07.459

about from 2014 to the end of 2023

 

22:07.459 --> 22:10.429

inflation-adjusted capital spending in oil and

 

22:10.429 --> 22:13.565

gas infrastructure, you know, however they

 

22:13.565 --> 22:15.801

take oil out of the ground, like the straws or I don't

 

22:15.801 --> 22:20.105

know, comes out of the pump for me, fell by 50%.

 

22:20.105 --> 22:23.075

It used to account for 1 in every $3 a Canadian

 

22:23.075 --> 22:26.178

company spent,  by the end of '23 it was 1 in 10.

 

22:27.646 --> 22:30.515

When I tell people this statistic I say, look, that doesn't

 

22:30.515 --> 22:32.617

even have to go back to 2014 levels.

 

22:32.617 --> 22:35.687

If it just gets slightly better that's that move from

 

22:35.721 --> 22:37.189

very bad to less bad.

 

22:38.857 --> 22:41.526

DT, take us through how you're thinking about this and

 

22:42.761 --> 22:45.797

maybe as well some thoughts on

 

22:45.797 --> 22:48.133

the path for short term rates.

 

22:48.133 --> 22:50.369

We've got a question from the audience, short term rates

 

22:50.369 --> 22:52.671

from the Bank of Canada as well.

 

22:52.671 --> 22:55.974

I think a little bit about the meta comment in

 

22:55.974 --> 22:58.944

terms of the skepticism that you receive on

 

22:58.944 --> 23:02.247

the road with respect to Canada and I think that it makes

 

23:02.280 --> 23:04.950

a fair bit of sense because if you do look around the

 

23:04.950 --> 23:08.387

economy today, I mean, things don't feel great.

 

23:08.387 --> 23:11.356

On that road to better, as DW outlined, we're

 

23:11.356 --> 23:13.859

still very much in the first few steps.

 

23:13.859 --> 23:17.229

I think that reveals an important part of our

 

23:17.229 --> 23:20.532

investment process and it reflects another trait of

 

23:20.532 --> 23:23.735

one of our building block portfolio managers, Dan Dupont,

 

23:23.735 --> 23:26.872

is that we can be very patient long term

 

23:26.872 --> 23:28.140

investors.

 

23:28.140 --> 23:31.376

When you think about the road to better for Canada

 

23:31.376 --> 23:35.113

it's inherently going to take a lot of time.

 

23:35.113 --> 23:38.517

As DW mentioned, the market will move well ahead of

 

23:38.517 --> 23:42.020

the wider economy. When we think a bit about the nature

 

23:42.020 --> 23:43.422

of the improvement on Canada

 

23:45.157 --> 23:48.059

it involves investing in our infrastructure. We know that

 

23:48.059 --> 23:51.263

the regulatory environment is a lot more favourable.

 

23:51.263 --> 23:54.199

We have that signal confirmed by our bottom

 

23:54.199 --> 23:56.735

up analysts who spend a lot of time talking to Canadian

 

23:56.735 --> 23:59.704

companies and that optimism that we see, at least

 

23:59.704 --> 24:02.707

from a top down perspective, is matched by the

 

24:02.707 --> 24:05.610

bottom- up. Inherently, if you're building infrastructure

 

24:05.610 --> 24:07.145

it does take a long time.

 

24:07.145 --> 24:08.980

It is moving in that direction.

 

24:08.980 --> 24:11.983

We think a little bit about diversifying trade.

 

24:11.983 --> 24:14.052

Yes, we're still in the teeth of a trade war with the

 

24:14.052 --> 24:17.622

United States but there is a steady drum beat

 

24:17.622 --> 24:20.792

of trade agreements and diversification in

 

24:20.792 --> 24:22.527

trade away from the US.

 

24:22.527 --> 24:25.530

Now, we won't obviously be able to entirely replace the

 

24:25.530 --> 24:28.967

US. Geographic and economic proximity makes that a very

 

24:28.967 --> 24:32.404

challenging ask. If growth does happen on the margin

 

24:32.404 --> 24:34.005

that's where it's happening.

 

24:34.005 --> 24:37.409

That is where we, again, can see a positive impulse on

 

24:37.409 --> 24:38.944

the trade side of the economy.

 

24:38.944 --> 24:41.413

Even when we think a bit about housing, and we're still

 

24:41.413 --> 24:44.850

working our way through a pretty significant leverage cycle

 

24:44.850 --> 24:46.384

among Canadian borrowers, but

 

24:47.953 --> 24:51.056

as we look at the steady drum beat of mortgages that

 

24:51.056 --> 24:54.125

are resetting at slightly less ridiculous interest

 

24:54.125 --> 24:57.095

rates that, again, just allows that

 

24:57.095 --> 25:00.198

supply of homes to be absorbed, households to

 

25:00.198 --> 25:02.634

get a little bit more of a tailwind in terms of

 

25:02.634 --> 25:05.770

discretionary spending. That does, again, bring us to

 

25:05.770 --> 25:07.339

a better economic environment.

 

25:07.339 --> 25:09.608

I think that's the path.

 

25:09.608 --> 25:12.143

Just comment quickly on the outlook for the Bank of Canada,

 

25:12.143 --> 25:15.113

the Bank of Cananda sees in the same way

 

25:15.113 --> 25:19.017

as the Fed this prospect of future growth.

 

25:19.017 --> 25:22.153

The move higher in rates has also happened in Canada when

 

25:22.153 --> 25:24.089

you look further out the curve.

 

25:24.089 --> 25:27.192

As Canada, and as the Bank of Canada specifically, sees

 

25:27.192 --> 25:30.128

notably a positive terms of trade shock

 

25:30.128 --> 25:33.131

coming from commodity prices which, again,

 

25:33.131 --> 25:35.767

reflects some of the changes we've seen in the global order

 

25:35.800 --> 25:38.770

where there is this rush to secure

 

25:38.770 --> 25:41.339

strategic resources that Canada has.

 

25:41.339 --> 25:44.643

Canada, again, as a nation of laws

 

25:44.643 --> 25:47.612

and a nation of good governance is a really strong

 

25:47.612 --> 25:50.148

candidate for this type of investment.

 

25:50.148 --> 25:52.884

The Bank of Canada sees that as a positive tailwind into

 

25:52.884 --> 25:55.487

investment, into capital inflows into the country.

 

25:55.487 --> 25:58.623

Their reaction function is to take

 

25:58.623 --> 26:01.626

interest rates higher, not jam them higher, not ruin the

 

26:01.626 --> 26:04.195

economy but at the same time just try to get the better

 

26:04.195 --> 26:07.265

balance between the risks around inflation that reflects, I

 

26:07.265 --> 26:10.936

think, a road to a much more promising economy.

 

26:10.936 --> 26:14.239

Yeah, it's interesting. I think there still are

 

26:14.239 --> 26:17.242

a lot of sort of dark clouds, grey clouds hanging

 

26:17.242 --> 26:21.112

over Canada in terms of the trade war and

 

26:21.112 --> 26:23.315

a disorderly resolution of that.

 

26:23.315 --> 26:24.916

Can I just add a quick point?

 

26:25.917 --> 26:29.054

That's also what we really like as investors because if

 

26:29.054 --> 26:31.656

sentiment is really negative and if the skepticism that

 

26:31.656 --> 26:34.292

some people in the room or online share, or that we see

 

26:34.292 --> 26:36.861

priced into the currency market or other parts of the

 

26:36.861 --> 26:38.597

investment community, we love that.

 

26:38.597 --> 26:41.399

We like being contrarian with respect to that.

 

26:41.399 --> 26:44.469

If Canada's out of favour that's an entry point for

 

26:44.469 --> 26:47.806

us. Again, we start to see this also with some of our

 

26:47.806 --> 26:50.775

colleagues in Boston who are managing funds

 

26:50.775 --> 26:53.912

for large pools of US money

 

26:53.912 --> 26:56.715

and Canada for them is a little bit of an out of benchmark

 

26:56.715 --> 26:58.016

or a very small part of their index.

 

26:58.016 --> 27:01.119

What we've seen in our conversation as we've been

 

27:01.119 --> 27:03.722

spreading this message about Canada, they're starting to

 

27:03.722 --> 27:05.924

come to the Canadian market as well.

 

27:05.924 --> 27:08.526

You can imagine that other large pools of investors might

 

27:08.526 --> 27:09.794

start seeing Canada more favourably.

 

27:09.794 --> 27:13.031

When you contrast that wall of potential

 

27:13.031 --> 27:16.067

money with a fairly small market that alone can be

 

27:16.101 --> 27:19.404

a nice tailwind that I think you would expect to see in

 

27:19.404 --> 27:20.538

the road ahead.

 

27:20.538 --> 27:22.440

Yeah, that's significant. I mean that is significant,

 

27:22.440 --> 27:24.643

right? I often say, I mean, GAA is

 

27:25.744 --> 27:28.747

$1 1/2 trillion. If you add on

 

27:28.747 --> 27:31.816

top of that the pool of assets that we

 

27:31.816 --> 27:34.819

meet with regularly on a weekly basis you're well into

 

27:34.819 --> 27:36.521

the trillions.

 

27:36.521 --> 27:38.690

Okay, I'm gonna ask a challenge... yeah, go for it.

 

27:38.690 --> 27:40.458

Before you ask the challenging question, maybe you'll think

of an easier one. Maybe

 

27:46.131 --> 27:48.299

we can bring a couple of these threads together with the

 

27:48.299 --> 27:51.136

middle section of the slides, the green, which is our

 

27:51.136 --> 27:52.470

positioning in fixed income.

 

27:53.571 --> 27:57.242

That big green down bar that you see there is

 

27:57.242 --> 27:58.243

our positioning in US fixed income.

 

27:59.044 --> 28:02.113

As I said, we got rid of our Treasuries, we sold that down.

 

28:02.113 --> 28:05.050

Our position 12 months ago which is the little, is that

 

28:05.050 --> 28:06.051

an orange diamond, was

 

28:08.019 --> 28:11.056

flat, now it's significantly underweight almost no

 

28:11.056 --> 28:12.057

holdings.

 

28:12.590 --> 28:15.226

That's because of the concerns that we've talked about.

 

28:15.226 --> 28:18.530

It's the fiscal, it's inflation,

 

28:18.530 --> 28:21.332

it's the move in interest rates, it's concern that way.

 

28:21.332 --> 28:24.769

There's also a big down bar

 

28:24.769 --> 28:27.739

there, that's developed investment grade.

 

28:27.739 --> 28:29.307

That's Europe and Japan primarily.

 

28:29.307 --> 28:32.444

I think a lot of you folks have heard about concerns

 

28:32.444 --> 28:35.547

about the ECB needing to raise rates and concern,

 

28:35.547 --> 28:38.650

in particular, about French debt because France is actually

 

28:38.650 --> 28:41.653

facing a lot of the debt size and

 

28:41.653 --> 28:44.189

trajectory issues that the United States is.

 

28:44.189 --> 28:47.592

People have been shying away from there and, again,

 

28:47.592 --> 28:48.827

we're underweight that.

 

28:48.827 --> 28:51.129

We've moved a lot that money, you can see implicitly there,

 

28:51.129 --> 28:52.630

to Canadian bonds.

 

28:52.630 --> 28:55.200

We talk a lot about Canadian equity, we should talk about

 

28:55.200 --> 28:58.303

the Canadian dollar. The Canadian bond market, the

 

28:58.303 --> 29:00.939

Bank of Canada may raise rates but they don't, in our

 

29:00.939 --> 29:04.709

judgement, have a reason to jack them up significantly.

 

29:04.709 --> 29:08.847

Our fiscal situation is much better

 

29:08.847 --> 29:11.883

than the United States, France, a lot of other

 

29:11.883 --> 29:13.084

countries around the world.

 

29:13.084 --> 29:14.219

That's not well known.

 

29:14.219 --> 29:16.788

No, it's not well known but it's gradually being

 

29:16.788 --> 29:19.524

acknowledged. We talked about our colleagues down in Boston

 

29:19.524 --> 29:22.861

who run a trillion and a half.

 

29:22.861 --> 29:25.964

If you look at the broader data, StatsCan is very good on

 

29:25.964 --> 29:29.167

this data, foreign investors

 

29:29.167 --> 29:32.737

buying Canadian bonds, that's been a record

 

29:32.737 --> 29:35.774

level, and that doesn't even include us because we are

 

29:35.774 --> 29:37.075

Canadians.

 

29:37.075 --> 29:39.911

Other big pools of capital are recognizing the better

 

29:39.911 --> 29:43.114

stability of Canadian debt even as US Treasury

 

29:43.114 --> 29:46.117

inflows into that market have

 

29:46.117 --> 29:48.720

basically gone to zero from foreigners.

 

29:48.720 --> 29:52.056

There's this big shift going on from investment

 

29:52.056 --> 29:53.992

in the US to elsewhere.

 

29:53.992 --> 29:57.395

Now, in the short term that's being swamped by all these

 

29:57.395 --> 30:00.532

capital inflows to the US related to

 

30:00.532 --> 30:03.601

AI. That's one of the reasons why the US dollar has

 

30:03.601 --> 30:06.371

been strong and that the Canadian dollar, like everything

 

30:06.371 --> 30:09.207

else, has been going down a little bit against it.

 

30:09.207 --> 30:12.177

The future look is that we're not the

 

30:12.210 --> 30:15.180

only ones who want to diversify and that will manifest

 

30:15.180 --> 30:17.182

itself in market pricing.

 

30:17.182 --> 30:20.485

That's very significant. These are not sentences

 

30:20.485 --> 30:23.254

we could have said for the last 13 or 14 years.

 

30:24.823 --> 30:27.425

I think it speaks to this sort of shift in regime that

 

30:27.425 --> 30:30.428

we've looked at. Something that DW mentioned I think

 

30:30.428 --> 30:32.197

is really important to emphasize is the role

 

30:34.232 --> 30:37.302

of the US dollar in all of this, especially if

 

30:37.302 --> 30:40.405

the US dollar is being elevated by a lot of

 

30:40.405 --> 30:42.907

the AI related flows.

 

30:42.907 --> 30:46.044

If there is a stumble in AI it's reasonable to expect

 

30:46.044 --> 30:48.646

that maybe some of that capital is repatriated.

 

30:48.646 --> 30:51.683

What you end up now seeing is that the US dollar,

 

30:51.683 --> 30:54.118

which you might have historically thought of it as a safe

 

30:54.118 --> 30:57.422

haven currency, ends up being positively correlated with

 

30:57.422 --> 31:00.425

AI. If that AI spending retreats for

 

31:00.425 --> 31:02.660

whatever reason then the US dollar does exactly the

 

31:02.660 --> 31:04.863

opposite of what you would hope in that type of scenario.

 

31:04.863 --> 31:07.899

That's again a reason why we want to be

 

31:07.899 --> 31:10.468

very cautious in terms of our allocation into the US

 

31:10.468 --> 31:13.071

dollar. I think a lot of other investors around the world

 

31:13.071 --> 31:15.940

are trying to find ways to diversify away from that US

 

31:15.940 --> 31:16.941

dollar risk as well.

 

31:17.775 --> 31:19.777

We do have a few minutes left. I see the question on

 

31:19.777 --> 31:22.046

inflation which I'll get to in just a second but I've got

 

31:22.046 --> 31:23.915

to ask this challenging question because this is the

 

31:23.915 --> 31:26.951

question that also comes up on the road

 

31:26.951 --> 31:30.021

very frequently, especially at a dinner where

 

31:30.021 --> 31:31.022

there's been a lot of wine.

 

31:33.558 --> 31:36.327

Why hasn't the Canadian dollar appreciated?

 

31:36.327 --> 31:39.330

There's a pretty significant overweight there which implies

 

31:39.330 --> 31:41.599

a view ...

 

31:41.599 --> 31:44.035

DW, take us through your thinking on the Canadian dollar

 

31:44.035 --> 31:47.272

and why hasn't it really been sort of

 

31:47.272 --> 31:48.273

rangebound.

 

31:49.173 --> 31:52.210

As I just mentioned, this is more of a US dollar

 

31:52.210 --> 31:55.613

phenomenon which has been going up against everything.

 

31:57.015 --> 32:00.151

That, in turn, is partly the capital being

 

32:00.151 --> 32:02.553

sucked in on AI, it's partly the interest rates themselves

 

32:02.553 --> 32:05.056

that have gone up in the United States.

 

32:05.056 --> 32:08.092

It's been frustrating us to see this sort

 

32:08.092 --> 32:12.063

of brighter horizon for Canada

 

32:12.063 --> 32:15.166

which we think will manifest itself in a stronger currency

 

32:15.166 --> 32:16.467

over time and that hasn't happened yet.

 

32:18.636 --> 32:22.040

One of the ways that I would think about it is we're

 

32:22.040 --> 32:25.443

not really interested in the next cent or two,

 

32:25.443 --> 32:27.345

we're interested in the next 10 cents.

 

32:28.680 --> 32:31.749

We're right now around 70 cents US in the

 

32:31.749 --> 32:34.786

Canadian dollar, which all of us down here in Nashville

 

32:34.786 --> 32:36.087

feel that.

 

32:36.087 --> 32:38.656

You look at prices, they look like Canadian dollar prices

 

32:38.656 --> 32:41.726

but it's 40% more expensive. That is

 

32:41.726 --> 32:42.727

meaningful.

 

32:43.428 --> 32:46.898

If you think about the upside downside on that 10 cents,

 

32:46.898 --> 32:49.567

down 10 cents from here would be 60 cents.

 

32:49.567 --> 32:51.302

Canadian dollar has never been there.

 

32:51.302 --> 32:54.205

The low in 2002 was 62 cents.

 

32:54.205 --> 32:57.508

Is it plausible that you would get that weak a currency

 

32:57.508 --> 33:00.511

in an environment where oil prices are going up

 

33:00.511 --> 33:03.414

and people are trying to diversify away from the US?

 

33:03.414 --> 33:06.184

That seems very hard to imagine for me.

 

33:06.184 --> 33:08.119

Could it go up to 80 cents?

 

33:08.119 --> 33:10.755

Well, that's kind of purchasing power parity.

 

33:10.755 --> 33:12.924

It's where it was for a long time. It's kind of historical

 

33:12.924 --> 33:16.160

average. That makes a lot more sense.

 

33:16.160 --> 33:18.629

Could the Canadian dollar keep weakening a little bit if

 

33:18.629 --> 33:20.398

the US dollar keeps going?

 

33:20.398 --> 33:23.701

Sure. But we're not interested in tomorrow

 

33:23.701 --> 33:25.069

or next month.

 

33:25.069 --> 33:28.373

We want to get the broader contours

 

33:28.373 --> 33:31.242

of market movements right which is why we stayed

 

33:31.242 --> 33:34.412

underweight the Canadian dollar all the way from parity to

 

33:34.412 --> 33:36.214

70 cents.

 

33:36.214 --> 33:38.649

We think that there's going to be a fair bit of runway for

 

33:38.649 --> 33:39.884

that trade on the way back up.

 

33:40.985 --> 33:42.353

It's a very important driver of return.

 

33:42.353 --> 33:45.723

We have the equity growth, we have the fixed income income,

 

33:45.723 --> 33:48.793

you have to get the currency piece right or you can flush a

 

33:48.793 --> 33:49.794

lot of the first two.

 

33:51.863 --> 33:55.099

We've talked about our view around bonds and how we're

 

33:55.099 --> 33:58.302

not huge fans, less of an equity overweight than

 

33:58.302 --> 34:01.372

where we were, call it, 12 months ago, how should we be

 

34:01.372 --> 34:04.375

thinking about other diversifiers. How are

 

34:04.375 --> 34:07.145

we thinking about broader diversification in terms of some

 

34:07.145 --> 34:10.248

of the other asset classes? DT, take us through

 

34:10.248 --> 34:11.449

how we're building that in.

 

34:12.850 --> 34:14.585

This will surprise exactly no one but you should always be

 

34:14.585 --> 34:17.789

thinking about diversification, especially

 

34:17.789 --> 34:18.956

as asset allocators.

 

34:20.291 --> 34:24.162

I've said the ABCs of investing are always be diversified.

 

34:24.162 --> 34:25.163

You need to go back to school.

 

34:27.532 --> 34:31.269

I'd say that when we're looking at diversifying equity risk

 

34:31.269 --> 34:33.771

that's really what I think bonds traditionally would have

 

34:33.771 --> 34:35.039

done for you.

 

34:35.039 --> 34:37.809

The US dollar traditionally could have done that for you as

 

34:37.809 --> 34:40.278

well. But for all the reasons we've outlined on stage thus

 

34:40.278 --> 34:43.314

far both of those as

 

34:43.314 --> 34:46.417

sources of hedge to equity risk just

 

34:46.417 --> 34:48.686

really aren't as reliable as they once were.

 

34:48.686 --> 34:51.722

So we've got to become more creative.

 

34:51.722 --> 34:55.460

You can see that in a couple of ways across the portfolio.

 

34:55.460 --> 34:58.129

First, you can see within the credit and spread sector

 

34:58.129 --> 34:59.697

we're beyond investment grade.

 

34:59.697 --> 35:02.767

We have a number of asset classes in that

 

35:02.767 --> 35:06.604

part of the market that I think does diversify equity risk.

 

35:06.604 --> 35:09.474

One that I would pull out specifically is emerging market

 

35:09.474 --> 35:11.576

debt but in local currency.

 

35:11.576 --> 35:14.745

We get a nice yield pickup and a currency basket that

 

35:14.745 --> 35:17.849

is fairly well correlated with Canadian dollars, which is

 

35:17.849 --> 35:19.684

a property we really want.

 

35:19.684 --> 35:22.787

We continue to hold protection against inflation.

 

35:23.988 --> 35:26.991

Specifically there it can be gold, it can be commodities

 

35:26.991 --> 35:30.094

more generally. I think we've talked a bit about the

 

35:30.094 --> 35:33.030

risks around the US dollar and some of the regime shift

 

35:33.030 --> 35:36.234

that we're going through where it's a unipolar

 

35:36.234 --> 35:39.237

world, traditionally led by the US dollar, is now more of a

 

35:39.237 --> 35:42.573

multipolar world. Some investors will look at commodities

 

35:42.573 --> 35:45.710

and gold and even Canadian dollars as a nice way to

 

35:45.710 --> 35:48.713

try to manage that multipolar backdrop.

 

35:48.713 --> 35:51.849

We want to have still that allocation there

 

35:51.849 --> 35:52.850

as well.

 

35:52.950 --> 35:55.486

We also have a collection of liquid alternatives.

 

35:55.486 --> 35:58.623

You'll hear from Dave Way, I think, right after

 

35:58.623 --> 36:02.193

us as well. That as an uncorrelated

 

36:02.193 --> 36:05.429

source of return for us, which really does emphasize,

 

36:05.429 --> 36:08.666

again, asset classes that we think can contribute

 

36:08.666 --> 36:11.169

to the return of the fund which is sort of why we're all

 

36:11.169 --> 36:14.772

here, but also really provide that sense of diversification

 

36:14.772 --> 36:17.808

so that when equities go through more a challenging

 

36:17.808 --> 36:20.645

period we have something that can really keep us in the

 

36:20.645 --> 36:22.480

game and contribute to relative performance.

 

36:23.781 --> 36:26.117

We're thinking about things in risk-adjusted returns.

 

36:26.117 --> 36:29.220

It's streams of basis points

 

36:29.220 --> 36:32.190

from various parts of the funds that

 

36:32.190 --> 36:34.192

you see up here. We only have a couple minutes left.

 

36:34.192 --> 36:35.593

There was a quick question on inflation.

 

36:35.593 --> 36:38.062

I'm going to quickly answer that and then I'll kick it to

 

36:38.062 --> 36:39.797

DW to close us out.

 

36:39.797 --> 36:42.900

The question around inflation was how should we

 

36:42.900 --> 36:45.603

be thinking about inflation in the context of elevated oil

 

36:45.603 --> 36:49.106

prices? I love talking about inflation so we

 

36:49.106 --> 36:50.875

could be here for another hour.

 

36:50.875 --> 36:54.078

Inflation will pull up and push up total inflation

 

36:54.078 --> 36:57.114

but the way central banks generally think of it

 

36:57.114 --> 36:59.584

is they remove food and energy, because, of course, none of

 

36:59.584 --> 37:02.753

us consume food or energy, and they look at

 

37:02.753 --> 37:04.589

underlying core inflation.

 

37:04.589 --> 37:06.591

We could go on at length about this, we've written on it.

 

37:06.591 --> 37:09.627

For the person that asked me that question,

 

37:09.660 --> 37:12.597

just find me later tonight and we can nerd out for a couple

 

37:12.597 --> 37:12.897

hours.

 

37:12.897 --> 37:16.000

I'm sure that's exactly what people

 

37:16.000 --> 37:17.268

want to do on the Broadway Bar is to talk about core

 

37:17.268 --> 37:17.301

inflation.

 

37:17.301 --> 37:20.338

There's not enough bourbon in this city to make

 

37:20.338 --> 37:22.073

that conversation tolerable.

 

37:24.408 --> 37:26.711

Well, there is probably less now after the weekend that

 

37:26.711 --> 37:27.712

some of you have had. DW, why

 

37:30.448 --> 37:32.116

don't you close us out with a couple of closing thoughts.

 

37:32.116 --> 37:35.453

I just want to thank everyone in the room, especially the

 

37:35.453 --> 37:37.955

entire sales team at Fidelity who does a spectacular job.

 

37:39.490 --> 37:42.460

Maybe the right place to end our session

 

37:42.460 --> 37:45.496

is on acknowledging that we've talked about

 

37:45.496 --> 37:48.699

a lot of things to worry about, and others on stage

 

37:48.699 --> 37:51.669

will as well. Whether that's rising bond yields

 

37:51.669 --> 37:54.639

is kind of the newest thing but there's, you know, is

 

37:54.639 --> 37:55.640

AI a bubble? The Iran war, what's

 

37:57.842 --> 37:59.143

gonna happen with that?

 

37:59.143 --> 38:01.012

All of these trade tensions,

 

38:02.280 --> 38:04.982

rising debt levels everywhere in the world, notably in the

 

38:04.982 --> 38:07.118

United States. People are

 

38:08.886 --> 38:09.887

scared of these things.

 

38:10.921 --> 38:14.325

In a sense, that's actually not a terrible sign

 

38:14.325 --> 38:17.361

because when you want to worry is when everyone is

 

38:17.361 --> 38:19.864

just euphoric about markets.

 

38:19.864 --> 38:21.332

There's always a wall of worry.

 

38:21.332 --> 38:25.036

There's always something to be concerned about.

 

38:25.036 --> 38:28.105

Not that you should downplay those concerns but you

 

38:28.105 --> 38:29.674

want to look at it as

 

38:31.375 --> 38:34.445

potentially an opportunity to say if things are

 

38:34.445 --> 38:37.415

getting better and there's fear there maybe we

 

38:37.415 --> 38:38.416

want to be invested.

 

38:39.550 --> 38:42.386

We've talked about a huge range of topics today.

 

38:42.386 --> 38:45.389

Our Q4 thought leadership paper will be out by the

 

38:45.389 --> 38:48.526

end of this week so please have a look at that.

 

38:48.526 --> 38:50.061

Again, thank you all for the support.

 

38:50.061 --> 38:52.363

I look forward to catching up with many of you over the

 

38:52.363 --> 38:53.364

next couple of days.

 

38:55.232 --> 38:59.537

Thanks for watching or listening

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38:59.537 --> 39:02.973

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We'll end today's show with a short disclaimer.

 

39:32.203 --> 39:35.973

The views and opinions expressed on this podcast are those of the participants

 

39:35.973 --> 39:41.078

and do not necessarily reflect those of Fidelity Investments Canada ULC or its affiliates.

 

39:41.078 --> 39:43.347

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39:43.347 --> 39:46.917

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39:46.917 --> 39:50.688

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39:50.688 --> 39:54.158

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39:54.158 --> 39:57.962

Read a funds prospectus before investing,

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39:57.962 --> 40:01.699

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40:01.699 --> 40:05.736

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40:05.736 --> 40:08.239

Thanks again. We'll see you next time.