FOCUS 2025: Sector watch: Market trends – Denise Chisholm

[00:00:04.237]

Hey Denise, good morning. Happy Friday.

[00:00:06.106]

Happy Friday everybody.

[00:00:07.540]

Happy Friday.

[00:00:08.908]

Patrick said you were the guru at Fidelity.

[00:00:11.678]

I've also heard data geek. I don't know which one you prefer.

[00:00:14.781]

Well, either is fine.

[00:00:17.417]

I mean that in a very positive way.

[00:00:19.652]

Let's start with the fact that you are part of QRI,

[00:00:23.890]

Neil Constable's group. Neil Constable spoke yesterday.

[00:00:27.827]

You sit with the equity analysts, you're not sitting in the pool

[00:00:31.965]

of all the engineers and everybody else, you're sitting more with the people

[00:00:35.335]

that are doing the research every day. Can you talk about why that is?

[00:00:38.271]

I would say I'm the least quanty quant in QRI.

[00:00:41.041]

That's partly a function that I started in 1999 in equity research.

[00:00:45.912]

I am very akin to the fundamental analysts in the sense that my

[00:00:49.949]

job really is to get the right names into our diversified

[00:00:54.020]

products. I just do it differently.

[00:00:56.089]

Our fundamental analysts, obviously, they talk to individual companies, they

[00:00:59.559]

build company models and they recommend individual securities.

[00:01:01.995]

I don't do that. I really talk about sectors, I talk about industries, I talk

[00:01:05.665]

about factors, I talk about the market backdrop, and I do it all through

[00:01:09.469]

historical probabilities. I'm looking for patterns in the data.

[00:01:12.338]

I'm looking for anomalous situations that have been predictive in the past.

[00:01:15.842]

We have great data sets for sectors and industries going back to 1962 that

[00:01:20.113]

has valuations and growth that are very interesting.

[00:01:23.783]

I juxtapose that with all the macroeconomic data out there and the government

[00:01:26.953]

databases to see all of the patterns that we can see in

[00:01:30.924]

the market.

[00:01:31.357]

As much as it is always different this time, the patterns, despite the

[00:01:35.395]

differences, remain the same.

[00:01:37.397]

I try to help our portfolio managers understand

[00:01:41.701]

the macro environment in a probabilistic way and make sure that they don't

[00:01:45.772]

make missteps in their portfolio on macroeconomic factors, and at the same time

[00:01:50.110]

get the best ideas that I have into our funds.

[00:01:53.179]

Usually, the way they use me, which is why I think I sit with the rest

[00:01:57.250]

of fundamental analysts, is to use me in conjunction with those fundamental

[00:02:00.987]

analysts to build conviction.

[00:02:03.156]

If I'm saying no on energy and our energy team is saying no one energy

[00:02:07.460]

then there's more conviction in terms of either not owning or owning a sector.

[00:02:11.631]

What's your day-to-day like? You've got people coming to you because they know

[00:02:14.868]

you're a great resource and you're going to them, you're doing presentations.

[00:02:19.272]

What's a week look like for you?

[00:02:21.207]

There's a lot of looking at data. I do start my day looking at data.

[00:02:23.877]

I have 10,000 data sets. I don't look at every one every day but I look at a

[00:02:27.413]

lot in a given day. Yes, it's always an interaction with a portfolio manager,

[00:02:31.217]

sometimes with an individual client, sometimes with our sales group.

[00:02:33.820]

Everybody asks great questions about the market and they're always interesting,

[00:02:37.490]

and I don't always have the answers.

[00:02:39.492]

To the extent that somebody asks a question of data that I haven't looked at

[00:02:42.295]

then I get to go and look at the data.

[00:02:44.197]

My days always start with data and they always sort of end with conversations.

[00:02:48.668]

What I try and do, and I think I started this in the pandemic when we all

[00:02:52.672]

sort of went home to our respective houses, was to stay engaged, which is

[00:02:56.843]

whatever I was working on that week I had to have the data come to at least

[00:03:00.780]

some kind of conclusion. Maybe the conclusion was there is no conclusion or

[00:03:04.484]

this is not helpful, this is not a helpful way to look at the markets, but

[00:03:08.555]

really, there is weekly research that can help investors either understand the

[00:03:12.025]

market or understand why I think that they should own what they should own.

[00:03:15.562]

It ends up in weekly research and then always goes

[00:03:19.632]

to monthly research, which I have an internal meeting that I call

[00:03:23.403]

factor-oriented debate. It's our sector spotlight meeting.

[00:03:26.472]

I co-present with Roy Justus who is our global technical strategist.

[00:03:29.375]

I will present my views and then everybody, basically, argues with

[00:03:33.313]

me about, well, you forgot this, well, it's different this time for these

[00:03:36.349]

reasons, Denise, can you consider this?

[00:03:38.618]

It's my view on the market driven by all this history and anybody can come.

[00:03:42.589]

Our quant analysts come and debate, our

[00:03:46.526]

asset allocation research team comes, people from SAI, portfolio managers from

[00:03:50.230]

SAI, our internal equity analysts come and our diversified

[00:03:54.200]

portfolio managers, obviously.

[00:03:55.935]

That's where all of my cohesive views end up and it's an internal debate.

[00:04:00.473]

That usually gets flipped to a monthly white paper.

[00:04:04.143]

Also I do a quarterly webcast for clients because you can see I kind of like

[00:04:07.880]

talking so they're like, well, go talk to clients too.

[00:04:10.283]

I do a quarterly web cast for clients where a lot of what we have in

[00:04:14.320]

those debates ends up in that webinar.

[00:04:16.723]

You kind of get a sense of what actually Fidelity views as

[00:04:21.160]

core research.

[00:04:22.762]

Backing up a little bit, the meetings that you do where you say, you know, you

[00:04:25.531]

kind of argue, I can't imagine you've ever lost an argument.

[00:04:28.601]

Is that in the classroom on the main floor by the elevators?

[00:04:31.638]

A lot of it's on Zoom. I will say I'm not a fan of hybrid

[00:04:35.642]

environments because I can't quite see everyone so I do everything on

[00:04:39.579]

Zoom and then I can see whose video is up and who's not up so then I could call

[00:04:43.449]

on people. Actually, I find Zoom extremely helpful and then anybody can

[00:04:47.487]

log in from anywhere and I don't have to worry about it.

[00:04:50.189]

I just mentioned 245 Summer. That building, it's

[00:04:54.294]

14 floors, I don't know how many thousand people are in there but that's

[00:04:57.263]

Fidelity Boston. Everybody's there.

[00:04:59.165]

What's it like for when you walk in there in the morning and be exposed to

[00:05:03.369]

all the resources that are there?

[00:05:04.771]

Oh, it's great because you can talk to anybody at any time who's invested in

[00:05:08.207]

any market, literally. Whether or not you're curious about bonds or equities

[00:05:12.312]

in the 1970s we have somebody who has expertise among

[00:05:16.349]

those hallways.

[00:05:18.051]

We also have the chart room which is just great history that you can see,

[00:05:21.154]

hundreds of years of data.

[00:05:23.589]

The resources are unparalleled.

[00:05:25.992]

What is the library?

[00:05:28.761]

I've heard Mark Schmehl refer to it, I heard Peter Lynch refer to it when he

[00:05:31.898]

was interviewed on The Compound, what is the library?

[00:05:34.534]

You mean the chart room?

[00:05:35.735]

No, I heard there's a library.

[00:05:36.969]

The library? I don't know what the library is.

[00:05:38.071]

Maybe you haven't found it yet but anyway.

[00:05:40.973]

That's a powerhouse for you, you're a sponge of all the information that comes

[00:05:45.044]

to you.

[00:05:45.478]

Try to be, yeah.

[00:05:46.512]

You're also on LinkedIn. Follow Denise on LinkedIn, she's a wonderful source

[00:05:50.083]

for all of us consumers of information as well so keep that up for us.

[00:05:53.653]

Other data geeks, yeah.

[00:05:55.321]

Let's talk about the data that you're receiving even about today.

[00:05:59.659]

When I got up today I put on CNBC, which is not always a good idea.

[00:06:03.329]

Futures were down huge. Go for a walk, come back, they're back up somewhat.

[00:06:07.433]

There's a lot of reasons for that but is that just noise?

[00:06:09.535]

Yeah, and volatility is normal. I mean, it's always a concern because the way

[00:06:13.039]

we interact with the markets on a day-to-day basis is, okay, if there's a

[00:06:15.875]

headline, do I gravitate to the headline, is this bad news, is this news

[00:06:19.879]

systemic enough to be a problem for the market historically?

[00:06:23.483]

I mean, odds are the answer is no.

[00:06:25.284]

Systemic issues are rare by their nature but it is always

[00:06:29.422]

that's the way we interact with the market.

[00:06:31.190]

But it's a dangerous way to interact with the market because we know,

[00:06:34.761]

historically speaking, markets bottom on bad news.

[00:06:38.030]

If you sell on bad news you have this problem empirically with

[00:06:42.268]

diminishing your returns, not improving your returns, which is sort of a

[00:06:45.538]

mathematical way of saying, look, the markets are a discounting mechanism and

[00:06:48.474]

you never know what bad news is already discounted.

[00:06:52.245]

And oh, by the way, it doesn't count that the market has gone up over the last

[00:06:55.581]

six months. That's actually not a discounted mechanism.

[00:06:58.584]

The last speaker was talking about momentum.

[00:07:00.319]

The interesting part about when stocks go up, you go, well, that means that

[00:07:03.623]

they must, at least over the long term, sort of gravitate two steps forward,

[00:07:07.560]

one step back. The more the market goes up the more it goes up in the future,

[00:07:11.864]

which is stocks are kind of the best leading indicator.

[00:07:14.400]

That's a little bit of a long-winded way to sort of think about bad news and

[00:07:18.070]

news on a daily basis. The interesting part to me is that I think

[00:07:22.041]

that discounting mechanism is best represented if you juxtapose

[00:07:26.512]

fear in the credit markets, high yield credit spreads, versus

[00:07:30.483]

fear in equity markets.

[00:07:32.418]

If you think about whatever it is that you're worried about, we can talk a lot

[00:07:35.254]

about your individual worries whether it be the job market in the United

[00:07:38.391]

States, earnings, the concentration risk in the Maga Seven, yada yada, yada,

[00:07:41.928]

that difference in terms of what you're worried about, can the market

[00:07:45.998]

climb the wall of worry.

[00:07:47.533]

The best thing I've looked at, and there's no certainty,

[00:07:51.938]

is to look at when the fear in the credit markets, when credit

[00:07:55.875]

spreads are narrow, there's always credit events, we're listening to

[00:07:59.812]

them right now, but to say that it is, generally speaking, muted and

[00:08:04.383]

the credit markets can absorb those potential losses and they're saying, hey,

[00:08:08.488]

credit spreads are still tight, they're in the bottom quartile of their

[00:08:10.857]

historic ranges, there's nothing really to see here in terms of systemic

[00:08:14.760]

problems and bankruptcies.

[00:08:16.762]

Then you juxtapose that with equity valuation spreads still being high,

[00:08:21.467]

which there's more fear in the equity markets, that's usually a good setup.

[00:08:25.738]

There's a linear relationship. The more fear there is in the equity markets

[00:08:28.908]

relative to those usually smarter credit markets, the more likely the

[00:08:33.045]

market is to go higher.

[00:08:34.747]

That is still what we are seeing.

[00:08:36.415]

Valuation spreads are still high, especially in the Russell 3000, and that's

[00:08:39.785]

just basically a function of when investors sell anything they think is risky,

[00:08:43.089]

they buy anything they think is safe, you get this gap, and it's usually an

[00:08:46.259]

opportunity. That seems strange to say, given that markets are up so much,

[00:08:50.730]

but that is much more predictive when you look historically then markets

[00:08:54.967]

going higher. If you use, hey, markets are up a lot, I think I want to take

[00:08:58.404]

some off the table, what history shows you is be careful because that hasn't

[00:09:02.508]

been a good indicator, and not only has it not been an indicator, usually want

[00:09:06.178]

to bet the other way and actually lean into market momentum.

[00:09:09.448]

Ramona talked a lot about signal-to-noise ratio yesterday, and obviously works

[00:09:12.618]

very closely with you, as do so many portfolio managers.

[00:09:14.720]

She's my quantiest PM.

[00:09:16.455]

Exactly. We were debating should she be a quant or, anyway.

[00:09:18.558]

Oh, I know.

[00:09:19.525]

She's decided to stay doing what she's doing.

[00:09:21.394]

She should.

[00:09:23.329]

When you think about noise in that ratio, when you started in

[00:09:27.466]

this role it must be up multiples from

[00:09:31.771]

when you started. How do you deal with that, the amount of noise that's coming

[00:09:35.207]

to you in the marketplace because you're looking for signal within this

[00:09:38.678]

[crosstalk].

[00:09:39.946]

Always, always. I mean, it's interesting, that's the best part of being sort of

[00:09:43.583]

a statistician as it relates to the equity market.

[00:09:45.885]

You're a detective too.

[00:09:46.185]

Absolutely, and it's always changing. My original job when I came out of

[00:09:50.156]

college was working for the government.

[00:09:51.958]

I was a cost analyst on the B-2 program.

[00:09:54.527]

It was really fun. I built really cool spreadsheets.

[00:09:56.596]

It was go, no go for capital investor programs.

[00:09:57.997]

Sorry, that was fun? Okay.

[00:09:59.398]

That was fun. I got to fly to the Pentagon, it was fun, or I thought it

[00:10:03.369]

was fine. Remember, I like data so this is what I do.

[00:10:06.305]

But at the end of the day there's only so much data you can analyze as

[00:10:10.242]

it relates to that.

[00:10:12.545]

There's an endless amount of data to analyze as relates to the market so I

[00:10:17.149]

think that's great. The more data there is, the more "noise" there is, the more

[00:10:21.020]

value, theoretically, I can add to our shareholders and our clients and

[00:10:25.091]

our portfolio managers. That's good for me.

[00:10:28.427]

A lot of the data that you get today is provided by the government.

[00:10:32.398]

There's a lot of stats out there. There's a government shutdown, can you take a

[00:10:35.434]

week off? What do you do now because of the lack of ...

[00:10:38.237]

are there other sources that you're gathering data from?

[00:10:41.007]

I was in, actually, the first government shutdown in the sense that I had

[00:10:44.610]

lagged pay. I was a government contractor so they were like, hey, we're not

[00:10:47.213]

going to pay you. I was like, does this really happen?

[00:10:49.181]

I just started here and I'm not getting paid.

[00:10:51.817]

There's interesting parts about government data and I find most of it ...

[00:10:55.755]

and I actually just talked about this on a video ...

[00:10:58.891]

quite lagging. When people sort of wring their hands and say,

[00:11:02.928]

well, we're flying blind, we don't really have the data that we need, I think

[00:11:06.699]

that in some ways the equity market is telling us the data we need.

[00:11:09.568]

Let me give you an example.

[00:11:12.304]

Payrolls, that is the way most people interact with their own economy,

[00:11:15.608]

certainly in the U.S. we feel the job market.

[00:11:18.577]

Are our kids getting hired, can they get summer jobs, do I feel secure in my

[00:11:22.548]

job? That is the way we interact with our economy.

[00:11:25.885]

It stands to reason that you would say, well, this is very important as

[00:11:29.855]

it relates to the U.S. economy so therefore it is important to us as investors.

[00:11:34.326]

When you look at payrolls, we just had one of the biggest negative payroll

[00:11:37.396]

revisions we've ever seen historically, certainly outside recession.

[00:11:40.800]

When you plot that revision, either normalized as a percentage of payrolls

[00:11:45.037]

or not, what you will find is an inverse relationship to what you think should

[00:11:49.108]

exist as it relates to stocks.

[00:11:51.477]

The bigger the negative revisions to payrolls, the more likely equity

[00:11:55.548]

markets are to go higher over the next 12 months.

[00:12:00.519]

Sounds strange. Why?

[00:12:02.455]

Because more often than not you have already seen below average returns.

[00:12:07.660]

To put this together into what has happened this year, in some ways

[00:12:11.864]

the slowdown that we have seen in the job market was accurately

[00:12:16.102]

predicted, and I'm being a little bit fast and free with the data,

[00:12:20.072]

by the almost bear market we saw in April.

[00:12:22.708]

That was exactly what stocks going down was correctly predicting, that

[00:12:26.645]

payrolls would slow. Now, the question is, well, stocks are up a lot, are they

[00:12:30.816]

correctly predicting that this is actually a soft patch that refreshes?

[00:12:35.387]

Onstead of focusing on the government data that I just told you is lagged, can

[00:12:38.824]

we look for a leading indicator somewhere that we do have data on?

[00:12:43.429]

In fact, we can, that's profits.

[00:12:45.931]

Again, there's a linear relationship.

[00:12:47.800]

The more profitable U.S. corporate America has been, the

[00:12:51.737]

more likely they have been to hire.

[00:12:54.106]

It's not 100% certainty, I can't guarantee anything but, again, there's that

[00:12:57.576]

monotonic relationship. For me, as somebody who looks at historical data,

[00:13:01.580]

if you say, okay, payrolls, well, I don't want to lean into a trap there and

[00:13:05.417]

make a mistake. I know that statistically they're a lagging indicator so as

[00:13:09.054]

much as there's hand wringing of we have no data can I look forward to a

[00:13:13.159]

leading indicator? Yes, I can because we have profits every month and we're

[00:13:16.629]

going through a quarterly earnings season right now.

[00:13:18.898]

Again, no guarantees but the more profitable corporations are, the more

[00:13:22.902]

likely they are to hire over the next year which justifies the fact that the

[00:13:26.405]

market has already gone up. Yes, I think that

[00:13:30.476]

is more data better, yes, but some of

[00:13:34.547]

that data is lagging.

[00:13:36.348]

Not all data is created equal and that's, I think, why it's so fun to

[00:13:40.286]

filter the noise from the signal.

[00:13:42.154]

What about the validity of data? Back in the summer there were jobs numbers

[00:13:45.658]

that came out and then they were revised so people make decisions and then say,

[00:13:49.195]

well, this isn't even useful.

[00:13:51.430]

Is that new?

[00:13:52.231]

No. That's why when Pamela asks me to talk about payrolls every time on

[00:13:55.367]

Fidelity Connects I'm like, ugh, not again.

[00:13:57.736]

The payrolls, they're the most heavily revised data series, with the exception

[00:14:01.106]

of the savings rate which is even more revised.

[00:14:02.942]

Don't even get me started on the savings right.

[00:14:04.910]

If anybody tells you about the savings rate, remember, it's just the most

[00:14:06.979]

heavily revised data series in history next to non-farm payrolls.

[00:14:11.350]

It does create an interesting dynamic when the Federal Reserve says

[00:14:15.421]

that they are data dependent on data that is heavily revised.

[00:14:18.958]

You sort of have to say, hm, as a skeptic that's interesting.

[00:14:22.027]

However, I think it's just part of a wide, big mosaic.

[00:14:26.966]

That is the problem with thinking through what data means and one

[00:14:31.070]

of the reasons why you get these inverse relationships.

[00:14:34.740]

It just goes to show that I think history can really help.

[00:14:37.877]

If you say, okay, there's revisions in payrolls, do we care about these

[00:14:41.747]

revisions, and then you come up with this pattern of a very different

[00:14:45.251]

relationship than you would expect then it should give you a big red flag as an

[00:14:49.188]

investor that, well, I can spend a whole lot of time on this but it's

[00:14:53.192]

risky from a historical perspective because it may not help me in the end

[00:14:56.762]

figure out how to invest.

[00:14:58.998]

Hello, investors. We'll be back to the show in just a moment.

[00:15:02.201]

I wanted to share that here at Fidelity, we value your opinion.

[00:15:05.771]

Please take a few minutes to help us shape the future of Fidelity Connects

[00:15:08.073]

podcasts. Complete our listener survey by visiting fidelity.ca/survey,

[00:15:13.178]

and you could win one of our branded tumblers.

[00:15:15.147]

Periodic draws ending by March 30th, 2026.

[00:15:18.217]

And don't forget to listen to Fidelity Connects, the Upside, and French

[00:15:21.820]

DialoguesFidelity podcasts available on Apple, Spotify, YouTube, or wherever

[00:15:25.858]

else you get your podcasts. Now back to today's show.

[00:15:30.529]

I've always been interested in your perspective on the volatility index, the

[00:15:33.933]

VIX. I was fortunate enough to be on the floor of the CBO and saw

[00:15:37.903]

that pit, it's one of the last of the open outcry.

[00:15:40.306]

It's a very active group and people like

[00:15:44.376]

our clients and so on would think that the volatility index spiking is a

[00:15:48.514]

scary thing but you've actually said that that indicates probably an upside

[00:15:52.484]

to the market.

[00:15:53.652]

Absolutely. I think Ramona said this as well.

[00:15:55.454]

Where most investors see risk we sort of run to the volatility.

[00:15:59.191]

Statistically you can see it.

[00:16:01.226]

The higher the VIX is the more likely the market is to be higher, meaning it's

[00:16:05.230]

a big indicator saying, hey, a lot of bad news has been discounted,

[00:16:09.501]

which is never to say that bad news goes to good news, bad

[00:16:13.505]

news just gets less bad.

[00:16:16.041]

It's that second derivative move that usually moves the market.

[00:16:20.212]

I wrote a piece early on in the year with the onset of tariffs about

[00:16:23.983]

uncertainty.

[00:16:26.251]

A lot of market narratives make sense logically.

[00:16:30.656]

It's just unfortunate that the data often doesn't support it.

[00:16:33.692]

When you think about high levels of uncertainty, or we say, well, it's a very

[00:16:36.161]

uncertain time, that means businesses will not spend, that means economic

[00:16:40.366]

growth will slow and that will be a problem for the stock market.

[00:16:43.769]

So you can say, okay, we can empirically measure uncertainty in a lot of

[00:16:47.206]

different ways. We have the data going back on tariffs and trade and monetary

[00:16:50.275]

policy, we can aggregate it together, we can create an uncertainty index.

[00:16:53.579]

We have data going to the '80s.

[00:16:55.414]

So you say, okay, we're at peak uncertainty. What has that meant?

[00:16:58.884]

Same thing with the negative revisions and payrolls.

[00:17:01.387]

The higher uncertainty has been, the more likely the market is to be higher.

[00:17:05.958]

Why? Because usually when uncertainty is very high it gets marginally

[00:17:10.295]

better, which is never to say that we go from uncertainty to certainty

[00:17:14.666]

but we get less uncertain.

[00:17:16.869]

That's the market moving event.

[00:17:18.704]

Again, it sort of highlights these pitfalls that you can, I think,

[00:17:23.042]

make mistakes as an equity investor by saying, okay, it's a very uncertain

[00:17:25.944]

environment, that means I should take some off the table.

[00:17:28.680]

No, when you look empirically at the data it usually means it's already priced

[00:17:31.984]

down.

[00:17:32.351]

So consensus is dangerous.

[00:17:34.186]

I think so but I'm a skeptic.

[00:17:38.624]

We see a lot of consensus about is this '99, 2000?

[00:17:42.828]

You want to talk about that?

[00:17:43.562]

Sure. It looks very, very different in the data to me.

[00:17:47.199]

Start with technology as sort of a sector overall.

[00:17:50.602]

This is very different than what we saw from a fundamental perspective in '99

[00:17:54.840]

and 2000 where you were at very low margin levels and, ultimately,

[00:17:59.912]

operating margins went negative.

[00:18:01.647]

This is one of the best secular operating margin trends that I have

[00:18:05.617]

ever seen in the data that we have going back to 1962 on a sector basis.

[00:18:09.922]

These are deeply profitable companies that we did not see in '99

[00:18:14.059]

in 2000. In fact, the valuation compression that we saw in technology

[00:18:18.297]

stocks in that quasi bear market in April was a reset

[00:18:22.734]

that is usually a very good starting point.

[00:18:26.138]

As much as technology stocks have become marginally more expensive, certainly

[00:18:29.875]

more expensive than they were in April, we are not at the elevated levels that

[00:18:33.712]

we even saw just a year ago, which is well below the

[00:18:37.950]

relative multiple or absolute multiple levels that we saw in' 99 and 2000.

[00:18:42.187]

That was a situation that I actually lived through at Fidelity.

[00:18:44.923]

When you start making up multiples based on revenues or revenue

[00:18:48.961]

growth or P/E to growth rates, we're not even seeing

[00:18:52.965]

that now. We're still talking about just relative forward P/E or just absolute

[00:18:57.369]

P/E where it's justified by the free cash flow driven by

[00:19:01.440]

these companies. Another way to say it is technology stocks are

[00:19:05.511]

I think 38% of the market cap, well, they're like 35% of the free cash

[00:19:09.581]

flow as well. There's a symmetrical relationship between

[00:19:13.619]

that that is not something that we saw in '99 and 2000.

[00:19:17.689]

From the data that I look at this just doesn't look anything like

[00:19:21.894]

it.

[00:19:22.761]

CEO sentiment, you've written about, it's not great but it's improving.

[00:19:26.999]

Talk about that relative to just what you see in the market but also what CEOs

[00:19:31.236]

are concerned about from a tariff standpoint.

[00:19:33.372]

How does that all connect?

[00:19:34.773]

It's interesting in the sense that we just talked about the leading indicators

[00:19:37.676]

and lagging indicators. Should we think about payrolls or should we think about

[00:19:40.612]

profits? CEO confidence is yet another leading indicator.

[00:19:44.583]

That is usually the way it works.

[00:19:46.418]

For me, when you think about earnings growth being the key, and I know you've

[00:19:49.755]

heard it enough, stocks do follow earnings, most of the time, that's not always

[00:19:53.659]

true at turning points but it is the very definition of the core

[00:19:58.063]

driver behind what I think is the continuation of the secular bull market.

[00:20:02.301]

The tax cut that we've seen early on is very meaningful

[00:20:06.872]

from a tailwind to durable,

[00:20:11.643]

high magnitude earnings growth, especially on a median level.

[00:20:15.113]

Now, the interesting part, if you look through history statutory tax cuts, ours

[00:20:18.850]

isn't statutory but it's close enough from an effective tax rate, when you look

[00:20:22.054]

though history you don't usually see a throughput immediately to either

[00:20:25.991]

GDP growth or earnings growth.

[00:20:28.694]

What you do usually see is a throughput into CEO confidence.

[00:20:33.031]

That is the interesting part about history.

[00:20:34.866]

When I wrote that tax piece it was saying, yes, look for a boost

[00:20:38.937]

in CEO confidence because that's usually what you see in year one.

[00:20:42.741]

In year two you get the durable earnings growth and you get the GDP bounce.

[00:20:47.179]

That's exactly what we've seen so far.

[00:20:49.748]

That was ... actually, CEO confidence was at recessionary levels

[00:20:54.086]

despite the fact that we were not in recession.

[00:20:56.722]

That's usually the sweet spot because when you're rising from low levels that

[00:21:00.392]

tends to predict better market returns going forward.

[00:21:04.162]

This is what I would say is a very historically

[00:21:09.334]

common setup where you see a catalyst, then you see it boosting confidence,

[00:21:13.472]

then you will see the boost in earnings, which is one of the reasons why I

[00:21:16.575]

think valuation is not really a headwind for the market, it's just a reflection

[00:21:20.312]

of confidence because CEOs are getting more confident in future earnings

[00:21:24.416]

growth.

[00:21:25.183]

You delve into history to look for patterns.

[00:21:27.986]

How far back can you go, how fast can you do that, and how

[00:21:32.357]

do you use AI to help with all this?

[00:21:35.060]

How far back can I go? It depends on the indicator.

[00:21:37.629]

I just wrote a note that is not flipped to LinkedIn yet

[00:21:41.633]

on CAPE, the cyclically adjusted P/E, and what that has meant through history.

[00:21:45.537]

That data goes back to the 1930s.

[00:21:47.472]

Not all data goes that far. If you wanted me to talk about Bitcoin, we're

[00:21:50.942]

starting to talk about it in 2010. It just depends on how

[00:21:55.180]

much data that we have and what you are trying to predict.

[00:21:59.184]

I try and be flexible in terms of my timeframes.

[00:22:01.553]

That said, when I'm looking for patterns in the data, and what I wrote about

[00:22:04.556]

with the CAPE note, you can't stay constant.

[00:22:06.325]

I can't take data from 1930 to present and say now that's predictive for

[00:22:10.395]

the future years. You have to see the way data has changed.

[00:22:13.298]

Whenever I'm look at patterns I'm seeing if those patterns are still true or if

[00:22:17.169]

they've evolved, and if they have evolved, why they have evolved.

[00:22:20.372]

Again, when you look at data in cycles I'm looking for differences in cycles

[00:22:24.109]

and then trying to see if those differences are predictive.

[00:22:27.579]

That's the way I assess patterns.

[00:22:30.515]

As it relates to AI so far, the way that I've used AI is

[00:22:34.553]

to help me be a better writer in terms of ...

[00:22:37.522]

I've got all this quant stuff up in my head and sometimes the translation

[00:22:42.361]

as it relates to getting those ideas in a way

[00:22:46.431]

that I think is easily understandable for the average person, AI is incredibly

[00:22:50.068]

helpful. It does not do my data work for me.

[00:22:53.305]

I'm not sure we'll ever get there, and I'm

[00:22:57.309]

not sure that I will ever have that much confidence, because what I like about

[00:23:00.345]

data is not the fact that it's static, it's the fact that you can argue about

[00:23:03.482]

it. It's the nuance in the data that I not only find fascinating but that's

[00:23:07.486]

where the information is.

[00:23:09.521]

Anybody can tell you that higher CAPE valuations lead to future lower returns

[00:23:13.825]

on a 10-year basis but I think it's interesting to think about how that curve

[00:23:17.262]

has shifted, why it might have shifted and why it may be wrong right now.

[00:23:21.533]

That nuance is I don't think something that AI is there yet.

[00:23:25.837]

Well, it's an interesting perspective on AI, and I suppose AI is useful to

[00:23:29.408]

people however it's useful to them.

[00:23:31.209]

Some may want it for data, some may want for writing or what have you.

[00:23:33.812]

I think you're right.

[00:23:34.279]

It's really in its infancy in that respect.

[00:23:37.015]

Let's talk about the U.S. consumer. Where do you think the consumer is right

[00:23:40.218]

now?

[00:23:41.319]

I think the consumer is fine-ish, much like the job market is

[00:23:45.457]

fine-ish.

[00:23:47.392]

I think that that's good enough for earnings.

[00:23:49.995]

I think one of the more controversial things I say is that I think

[00:23:53.999]

you would think that the U.S. consumer is a big portion of the economy, it's

[00:23:57.402]

70% of GDP and GDP is really important for the way you think about equity

[00:24:01.339]

markets. GDP and equity markets have not really gone hand-in-hand

[00:24:05.777]

since 2000. The entire reason behind that is because profit

[00:24:09.781]

margins have been higher cycle to cycle.

[00:24:11.950]

We are seeing the juxtaposition that I think underpins the secular bull market

[00:24:16.822]

regardless of what you think about as it relates to the economy, because

[00:24:22.093]

corporate America is more profitable cycle to circle even though the consumer

[00:24:26.298]

is at the same level of growth.

[00:24:29.234]

When I look at GDP, we just talked about this on The Compound, people usually

[00:24:32.337]

quote, oh, GDP was just 3.9%, that's a quarter-on-quarter adjusted rate.

[00:24:36.908]

Year-on-year in the U.S., I think consumption is probably a little bit

[00:24:40.879]

above this because investment is below this, but real GDP growth is only 2%.

[00:24:46.151]

Back in the day we would call that stall speed.

[00:24:48.520]

Remember that? We would say if you fall below 2% then you're really at

[00:24:52.457]

risk for a recession. This is not a particularly robust environment at all.

[00:24:56.962]

It's also not a recession. I think the same is true for the consumer.

[00:25:00.365]

There's parts of the consumer that are deeply struggling, there's parts of the

[00:25:03.735]

consumer that are doing fine.

[00:25:05.537]

On average, the consumer is fine-ish, which is not

[00:25:09.541]

to say that every consumer is fine.

[00:25:11.543]

I think what I don't want investors to do is to say, okay, how is the

[00:25:15.547]

consumer, and I say, it's just fine, does that translate to the equity market?

[00:25:19.684]

Ts the equity only just fine?

[00:25:21.620]

No. I think the equity has a much, much more constructive set up

[00:25:25.557]

than consumption.

[00:25:26.825]

The consumer being an ish is vulnerable but you're keeping an eye on

[00:25:30.829]

that.

[00:25:31.129]

Sure, I always keep an eye on it.

[00:25:32.898]

Of course. Let's move to Canada and talk about energy and gold.

[00:25:38.403]

Let's talk about energy. Energy is one of my biggest bones to

[00:25:42.340]

pick with our diversified portfolio managers because usually when they think

[00:25:45.877]

about recovery they want to own energy stocks.

[00:25:48.380]

I do understand that because energy is one the only sectors that when

[00:25:52.350]

it works you get earnings growth and valuation expansion.

[00:25:56.788]

That's actually pretty rare in cyclical sectors.

[00:25:59.291]

You get a lot of upside if you get the cycle right.

[00:26:01.593]

The problem that I have with energy, and we can talk about excess supply in a

[00:26:04.329]

second, the problem that I have with the energy is the renormalization of

[00:26:07.933]

operating margins or returns relative to history, meaning

[00:26:12.270]

2022, we have the data going back to 1962, 2022 was the most profitable

[00:26:16.741]

energy companies have ever been on my data set, with the spike in oil prices.

[00:26:21.513]

From that we are still above trend.

[00:26:24.549]

We are still renormalizing which means operating margins are

[00:26:28.520]

still deteriorating.

[00:26:30.522]

That is not a good setup, historically speaking, for energy.

[00:26:34.025]

You say, okay, Denise, but you just told me the market's a discounting

[00:26:36.394]

mechanism and energy stocks are cheap, doesn't that mean that they've priced in

[00:26:39.097]

the operating margin compression?

[00:26:40.832]

No. Energy is the only cyclical sector where you get trough margins

[00:26:44.869]

on trough earnings, meaning that you are not paid to

[00:26:49.007]

be early in the energy sector.

[00:26:50.775]

There is always more downside than you think because of that historic

[00:26:55.413]

setup from a relationship perspective.

[00:26:59.417]

I think that we are just not there in terms of normalized fundamentals.

[00:27:04.422]

My biggest bone to pick of the energy sector, why I think that the risk-reward

[00:27:07.459]

is not positive, is that renormalization that we still

[00:27:11.463]

are in the early stages of.

[00:27:13.498]

However, we do have an excess supply issue.

[00:27:17.636]

The interesting part, when people talk about either OPEC cutting or hiking

[00:27:21.706]

I think, again, it's one of those interesting empirical things where the data

[00:27:25.410]

works the opposite way that you would think.

[00:27:27.145]

Okay, OPEC's cutting and that withdraws

[00:27:31.182]

barrels from inventory.

[00:27:32.884]

That means if inventory is lower prices should be higher.

[00:27:37.022]

There's no historical relationship between inventory levels relative to

[00:27:40.792]

historical averages and price.

[00:27:42.927]

I know that that's very highly disputed but I can show you the data,

[00:27:47.298]

which is to say there's no consistency.

[00:27:49.000]

Why? Excess capacity is 10 times more important than

[00:27:53.171]

inventories as it relates to the price level.

[00:27:56.307]

Said differently, the market's smart, the market knows that if OPEC's

[00:28:00.979]

cutting barrels those barrels can come right back on,

[00:28:04.949]

which means your upside is capped from a price perspective.

[00:28:10.255]

That excess capacity that we see in OPEC cuts and in shale

[00:28:14.292]

production is meaningful, will likely weigh on price,

[00:28:18.263]

which will likely continue to weigh on earnings, which likely continues to

[00:28:21.800]

weigh on the normalization, so energy is a negative risk-reward.

[00:28:26.071]

Well, I believe you on all that but this is a discussion you get into with the

[00:28:29.741]

energy side. It must be quite heated.

[00:28:32.444]

Yeah, it can be, it can be. Well, I mean heated in a good way.

[00:28:36.047]

None of us know the answers, I'm just presenting the data as I see it.

[00:28:39.017]

I think you know the answer's gold. Let's talk about gold.

[00:28:41.453]

Gold is tricky.

[00:28:43.521]

Everybody said, what does this gold move mean?

[00:28:46.391]

I'm not going to be helpful here because I will tell you that gold is not

[00:28:49.461]

consistently correlated to anything.

[00:28:54.432]

Actually, the gold analyst, Boris, is going to be on my webcast that I do for

[00:28:57.869]

clients because everybody wants to talk about gold.

[00:28:59.871]

He's like, well, this is about the dollar debasement and this is about interest

[00:29:03.441]

rates. I'm just not so sure because gold has changed its stripes many,

[00:29:07.579]

many times historically. If you had to say, Denise, I need you, and you're

[00:29:11.316]

saying this, Denise, I need you to say something conclusive I would say gold's

[00:29:14.786]

closest correlation is actually to commodities, not real interest rates,

[00:29:18.857]

not inflation, not the dollar, not currency debasement.

[00:29:22.894]

That's the closest corollary, which means it's driven by supply and demand

[00:29:26.765]

dynamics. It is definitely the best supply and demand

[00:29:30.835]

commodity.

[00:29:31.469]

Forget for a second central bank buying and dollar debasement but just when you

[00:29:35.273]

think about structural growth as opposed to energy that I talked about

[00:29:39.377]

as in chronic oversupply, there's not a chronic oversupply of bullion.

[00:29:44.349]

You have a much better supply and demand dynamic from a commodity perspective.

[00:29:49.154]

I am cautious still on the miners, which has been wrong.

[00:29:52.390]

Denise Chisholm has been very wrong year-to-date on the miners because

[00:29:56.761]

cycle to cycle they have destroyed free cash flow.

[00:29:59.764]

Could it be different this time?

[00:30:01.499]

Maybe. Certainly, because bullion has gone up so much they are showing much

[00:30:05.203]

more free cashflow but again, when you sort of think about the long-term over

[00:30:09.140]

time if you're asking me, and portfolio managers do, would you rather own

[00:30:13.211]

semiconductor stocks, software stocks, technology, capital markets, brokers,

[00:30:17.715]

parts of consumer discretionary or gold miners, I would lean all

[00:30:21.686]

the way over here. I'm much more recommending overweights in technology

[00:30:26.057]

than I am in metals and mining.

[00:30:28.593]

Jurrien would connect gold to crypto as far as in the same sentence, not

[00:30:32.764]

that they're the same but in the sentence. Let's talk about crypto.

[00:30:35.533]

I think in the same sentence is right because it's theoretically digital gold.

[00:30:40.238]

The problem that I have is, again, back to the data.

[00:30:42.540]

I was just on our crypto webcast, and forget what it

[00:30:46.778]

should be, tell me what it is, the closest correlation from Bitcoin perspective

[00:30:51.282]

is to the equity market. It's not to gold, it's not to bonds,

[00:30:55.320]

it's not to the dollar. The highest correlation is actually to unprofitable

[00:30:59.390]

technology. To me, I think that there's a lot of talk about of Bitcoin

[00:31:03.194]

potentially diversifying assets.

[00:31:05.396]

It looks a lot like mathematically a [indecipherable] play on the NASDAQ

[00:31:09.734]

in my work.

[00:31:11.970]

I think you have to make sure that you understand, at least, what it is

[00:31:16.140]

acting like right now.

[00:31:18.376]

Look, I'm bullish on the equity market, I'm bullish on technology stocks so

[00:31:22.080]

that makes me bullish on Bitcoin, which I think is interesting.

[00:31:25.216]

When you lower interest rates you would think that lower interest rates mean

[00:31:28.319]

you should buy equities, you can't see that empirically.

[00:31:30.722]

I think it is true this time but you don't see that linear relationship

[00:31:35.059]

in the data. In Bitcoin, you do.

[00:31:37.929]

It's so interesting. In Bitcoin there is a perfect monotonic relationship

[00:31:41.399]

between lower two-year yields and future price rises in Bitcoin.

[00:31:46.037]

You would think, well, maybe that is that hedge of, well, if lower interest

[00:31:50.074]

rates are reflective of a really soft economic environment then maybe you want

[00:31:53.244]

to own Bitcoin. But then you say, well, if earnings growth is good my hit rate

[00:31:57.081]

even goes higher. It sort of shows you that Bitcoin is the levered

[00:32:01.252]

play on things that you would think would be the levered play for equities.

[00:32:05.290]

I'm constructive on Bitcoin but I think you have to be careful in terms of

[00:32:08.593]

thinking it will act in a way that so far it hasn't.

[00:32:12.330]

Makes sense. We're in earnings season, earnings growth.

[00:32:15.099]

I know you have comments around that.

[00:32:18.536]

It's been a unique cycle. Cap-weighted earnings growth in the U.S., probably

[00:32:20.772]

everybody knows, driven by technology stocks has been fine.

[00:32:23.341]

The trough, I would say the very hard soft landing or the

[00:32:27.312]

very soft hard landing was in 2022.

[00:32:29.747]

That was what I would deem an earnings recession.

[00:32:31.950]

Earnings contracted by about 7 1/2 [audio cuts

[00:32:35.920]

out] depending on how you calculate it, and we've been rising on a cap-weighted

[00:32:38.423]

basis ever since. You say, okay, this has been driving stocks

[00:32:42.460]

higher. Now, what has been different this cycle has been that the median

[00:32:46.864]

earnings for the companies has actually still been in a contraction.

[00:32:50.401]

It's been one of the longest contractions that we've seen since COVID and

[00:32:54.405]

the financial crisis. These are very meaning — not COVID, since the

[00:32:58.409]

financial crisis. It looks more like those typical recessions.

[00:33:02.113]

This has been unique in that the differential between cap-weighted earnings and

[00:33:06.084]

equal-weighted earnings has been the most durable on record, meaning that

[00:33:09.587]

usually cap-weighted earnings recovers, then median earnings recovers

[00:33:13.725]

within six months.

[00:33:15.660]

Ours has been double that lag.

[00:33:18.196]

Again, backing up, you say, okay, well, what does this mean?

[00:33:20.898]

We've seen a durable earnings contraction on a median basis that we

[00:33:24.869]

seem to be just emerging from.

[00:33:28.272]

What happens when you just emerge from a very durable earnings contractions?

[00:33:32.877]

You usually have a durable earnings recovery.

[00:33:36.280]

The longer your earnings duration contraction was, the more durable your

[00:33:40.451]

recovery is, and the higher the magnitude is.

[00:33:43.388]

This is supportive of that secular bull market.

[00:33:46.224]

Said differently, that was a lot of math, said differently, we're finally

[00:33:48.760]

getting diffusion. I think that we have the catalyst in terms of the tax cuts,

[00:33:52.964]

the Fed lowering interest rates, the median earnings of a company recovering

[00:33:57.368]

and I think that that makes it very likely that earnings growth is durable,

[00:34:01.572]

not just this year, not just next year, but maybe for much longer

[00:34:05.543]

than you think, which might mean that valuations are not

[00:34:09.680]

nearly as high as everyone is calculating, which means that they are not

[00:34:13.785]

the headwind that investors think.

[00:34:16.521]

Stocks do follow earnings and when we're thinking about noise versus signal I

[00:34:19.924]

think you always have to gravitate back to what is the base case, and right now

[00:34:24.262]

earnings are getting stronger and more diffuse, which is usually

[00:34:28.466]

the driver for equity markets.

[00:34:30.268]

So picking up on valuations, is momentum breeding momentum in the market?

[00:34:34.005]

Yes, and it has historically. That goes back to the I know that people want to

[00:34:37.442]

use price as a, well, maybe it's up a lot so I should take some off the table.

[00:34:40.645]

Look, I mean, you can do whatever it is that you want to do, however, I would

[00:34:44.282]

tell you that over the long term that strategy does not work, meaning that the

[00:34:47.952]

more the market goes up, the more of the market is likely to go up, which means

[00:34:52.023]

kind of in a way that stocks are more likely to get it right than the

[00:34:55.326]

government data is. If you go back to that payroll analogy,

[00:34:59.430]

the more negative payrolls are, the more likely markets are to go higher,

[00:35:03.534]

and the more likely equity markets are to get it right, then the market

[00:35:07.538]

actually figures out the data before the data is even predicted.

[00:35:11.209]

Is the converse of that where when we see a demise of the market there's

[00:35:15.313]

a spiral because it kind of feeds itself, the momentum either direction?

[00:35:19.383]

Yes, it definitely works both ways.

[00:35:21.185]

That's sort of getting back to valuation.

[00:35:23.621]

That's the dangerous aspect of valuation as well.

[00:35:25.923]

If you go back to, you know, everybody says valuation is a poor timing

[00:35:28.493]

indicator. Here's an example of that.

[00:35:30.661]

Stocks in 2008, they got as cheap as 10 times earnings

[00:35:34.632]

in October. Then stocks fell 30%.

[00:35:38.169]

When they bottomed in March 2009 they bottomed at 15

[00:35:42.573]

times earnings. The problem was not the P/E.

[00:35:45.109]

The problem was the E, to your point, is that we weren't 10

[00:35:49.113]

times earnings because earnings were too high.

[00:35:51.782]

That's why that earnings is the key signal and the market sometimes,

[00:35:55.786]

at times, correctly predicts the demise of earnings.

[00:35:58.856]

Okay, there's probably a few people in here thinking this.

[00:36:01.759]

You've been a secular bull for a long time what's going to change that?

[00:36:07.231]

I mean, that is the right question and it's true in terms of if you ask me,

[00:36:11.269]

Denise, you're always predicting Goldilocks, and I do always say, like,

[00:36:15.339]

it's true, Goldilocks actually has the highest odds.

[00:36:18.276]

Don't forget that. If you think about, oh, Denise, you're just a cheerleader

[00:36:21.579]

for the secular bull market, true, however, you should remember

[00:36:25.550]

that, on average, any given year on a rolling 12-month period

[00:36:29.754]

stocks go up 75% of the time.

[00:36:31.789]

That should be your sort of entry point, at least when I think of it from a

[00:36:35.026]

historical perspective, because if you're a little bit too cute by half for

[00:36:38.696]

that you can miss out on returns structurally.

[00:36:42.433]

The things that I look at, there's three at least.

[00:36:46.103]

First of all, credit spreads.

[00:36:48.272]

We talked about how narrow they are. That's usually a good thing until it's

[00:36:51.342]

not. For me, what I worry about is not

[00:36:55.313]

bad news, it's really good news.

[00:36:58.950]

Really, really narrow credit spreads, which were not there, right?

[00:37:01.686]

Bottom 5% of history, we have the data back to 1980, that's usually, oh,

[00:37:05.790]

everything's priced into the upside.

[00:37:07.658]

At the same time, look, there's a bunch of good leading indicators.

[00:37:11.262]

If you sort of plot this from an oscillator perspective what you can see is

[00:37:15.666]

we're not even really that far above median levels,

[00:37:20.104]

meaning that we've still got time to get to what people would call peak

[00:37:24.141]

economic growth. We're just not there yet but that would be a point at which

[00:37:28.112]

the risk-reward usually shifts off. The third one would be around valuation

[00:37:32.483]

spreads. When valuation spreads are very narrow in the equity market and

[00:37:37.188]

credit spreads are rising, that's what we saw in 2009, that's what we saw

[00:37:41.158]

in 2001, when the credit markets are saying, hey, we've got some bankruptcy

[00:37:45.363]

issues, and the equity markets are saying, nah, it's all going to be fine,

[00:37:49.734]

that's a dangerous setup.

[00:37:51.535]

For me, I'm looking for really good news, like earnings growth above 25%,

[00:37:56.073]

the OECD LEI in the top quartile, credit spreads below the bottom 5%,

[00:38:00.444]

that's usually a poor setup because it usually means all of the good news

[00:38:04.382]

has been priced in. That's I look for but we're not there yet.

[00:38:08.486]

Unfortunately, we have to wrap very soon.

[00:38:10.254]

I've got a few fun questions about you.

[00:38:14.191]

First job.

[00:38:15.159]

I'm not that fun. First job. Oh, the government one.

[00:38:17.261]

That was your first job? You didn't paint walls or...

[00:38:19.864]

Oh, first job ever.

[00:38:21.565]

I worked at Berman's Leather in the Cherry Hill Mall.

[00:38:26.370]

I sold a leather outfit to Reggie White who

[00:38:30.408]

was in the NFL for the Eagles.

[00:38:34.378]

So cool. Netflix or Amazon Prime?

[00:38:36.747]

Netflix.

[00:38:38.516]

What song's most likely to get you on the dance floor?

[00:38:41.519]

Living on a Prayer, Bon Jovi. I'm from New Jersey.

[00:38:43.321]

Neil Constable told me the other day, he said you're a real metalhead from New

[00:38:47.091]

Totally. Yeah, we jive on that.

[00:38:48.492]

Hair metal. Go-to coffee order.

[00:38:51.429]

Oh, black, anything, doesn't matter.

[00:38:52.997]

How many have you had this morning? That's just my question.

[00:38:55.466]

Three.

[00:38:56.667]

Favourite podcast right now, other

[00:39:01.272]

than yours.

[00:39:01.806]

I was just going to say, can I say mine?

[00:39:04.575]

Now it's The Compound and  Friends, which I did not know about before.

[00:39:07.545]

Which is the one we talked about with Jurrien and Peter Lynch was just on as

[00:39:11.148]

well. I could go on and on.

[00:39:13.617]

You did say at the beginning of our discussion that there's times you don't

[00:39:16.954]

have answers, and I don't think that's physically possible.

[00:39:21.926]

We have one minute, if a client comes to one of our advisors and says,

[00:39:25.863]

I'm nervous about the market what's a quick answer?

[00:39:28.099]

Just be careful, markets are a discounting mechanism.

[00:39:30.301]

They go up more often than you would think on bad news.

[00:39:32.737]

We've seen that over the last five years. Think of all the things that had been

[00:39:35.439]

wrong. We've had COVID, we had lockdowns, we had an inflation scare,

[00:39:39.443]

we had a banking crisis, we might be in the throes of another mini banking

[00:39:42.813]

crisis, markets are up 70%.

[00:39:46.117]

Enough said. Denise Chisholm, thank you very much.

[00:39:48.419]

Great to be here.

[00:39:49.787]

Thanks for watching or listening to the Fidelity Connects

[00:39:53.724]

podcast. Now if you haven't done so already, please subscribe to Fidelity

[00:39:57.862]

Connects on your podcast platform of choice.

[00:40:00.664]

And if you like what you're hearing, please leave a review or a five-star

[00:40:03.501]

rating. Fidelity Mutual Funds and ETFs are available by working with

[00:40:07.471]

a financial advisor or through an online brokerage account.

[00:40:10.841]

Visit fidelity.ca/howtobuy for more information.

[00:40:14.545]

While on Fidelity.ca, you can also find more information on future live

[00:40:18.382]

webcasts. And don't forget to follow Fidelity Canada on YouTube, LinkedIn,

[00:40:22.520]

and Instagram.

[00:40:24.522]

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

[00:40:27.391]

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

[00:40:31.228]

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

[00:40:35.166]

its affiliates. This podcast is for informational purposes only, and should not

[00:40:39.170]

be construed as investment, tax, or legal advice.

[00:40:41.705]

It is not an offer to sell or buy.

[00:40:44.008]

Or an endorsement, recommendation, or sponsorship of any entity or securities

[00:40:48.345]

cited. Read a fund's prospectus before investing, funds are not guaranteed.

[00:40:53.150]

Their values change frequently, and past performance may not be repeated.

[00:40:56.720]

Fees, expenses, and commissions are all associated with fund investments.

[00:41:00.558]

Thanks again. We'll see you next time.