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Kerry now we have a money manager says despite the run up that we've seen is your stocks are still well priced.
The chairman and CEO -- -- which has two billion dollars under management -- thanks so much for joining us.
-- you're -- here you think that this rally it's gonna continue how come.
Well I think you know it's it's a relative.
Valuation here I mean you know it can -- world to diversify its we're looking at stocks bonds and alternatives.
And so if you look at fixed income he's days you know stocks are looking like a better value for our clients so.
You're you're seeing a more interest being put there can -- for our clients.
Because we're just concerned about interest rates overall in the long run.
And you know something you were speaking about next week that.
Probably for fox viewers they should pay attention -- if we have a pretty large treasury auction going on about a 125 billion.
And yeah we've had little bit of rising interest rates this year -- reaction to see how this auction goes next week are you gonna be buying into it.
Well -- the what we're doing our fixed income it's really good question is we've actually shorten our operations so if the last year or so we've had what you call Barbell you know short maturities and then something longer ten to fifteen years we've brought -- the end.
And I -- them it's not -- -- latter this time -- want to step -- so that the average duration for fixed income portfolio can -- Looks more like three to five years so if we are participating it's gonna be in the shorter end of the curve.
And we're looking at prices of the -- that are getting near for boxing Galilee and the price of oil per barrel as rising higher and higher you're not worried about -- Well you've become worried about if it if it sustained.
Right so if you see it for six months then you're really paying attention if it lasts a whole years and it's a real problem so.
That the question is in the price is the duration of the price experience to remember also for the average consumers a percentage of your disposal income.
If you go all the way back to 1980 it was.
Eight plus percent of your disposable income one -- energy these days it's only about 55 and a half so it doesn't have a -- an effect on consumption.
As you would think in the near term.
But it like -- -- if you have these higher energy prices first sustained period of time then we're talking a problem for stocks.
Drew I understand that your -- total diversification you think all the diversification benefits it's good advice good solid -- but.
You think that the thirty year bond run is about over it's about run its course if -- Why are you still 30% in -- box.
Well I mean used to you still wanna provide some stability right I mean -- -- invest for individuals and families.
So we don't have you have more I have a bigger percentage of bonds and you do in stocks generally speaking and you think that the thirty year run in the bond market.
-- I I'd say I'd say it's more like a third a third a third are saying is -- still most -- -- you weigh heavily in stocks if you think that the bond run is over.
-- -- the last ten years of volatility caddick answers that question doesn't for stocks.
But I think we're emerging from that and but I think where we will agree is this is the last thirty years all we've seen in fixed income returns declining interest rates.
An increasing credit quality.
And we believe it can -- which -- gonna see.
Going forward more than likely is rising interest rates and declining or what I would call stratified your credit quality so.
Credit quality is going to be a bigger problem for fixed income management going forward than it has been in the last thirty years were all we've donors.
-- roughly increasing credit quality around the world.
Now we're gonna see is transportation of that and -- so that work out -- to look very different from the last thirty years so it's.
You're sort of in a watershed period for fixed income.
And in the fixed income management going forward to be very different than what we've done of the last thirty years what would you -- your part a lawyer today.
Well right now you know were -- Dividend paying stocks you know large cap multinational stocks.
They haven't participate is much in this rally.
You know this year to date.
They were they heroes last year of course and so we're gonna -- into them here and wait for a bond point to -- what they would call more risk to the portfolio.
In more growth more -- just.
Take the Russell I share.
For example or even emerging markets with -- Harding loved her emerging market -- as -- -- pullbacks in -- stocks.
We're gonna be adding into these places -- probably take you from our dividend payers.
Drew can -- -- chairman and CEO of can Neely trusted course she's got that positive view because in Texas religious grown those jobs down in Texas good for you drew thank you very much right.
And we got a pipeline.
You've got a pipeline -- problem is it doesn't connect it with a pipeline up north.
The problem -- so I -- -- I don't it's just that thousand miles that were worried about adapt well it is it's a very important point though it it is but it right now it's a pipeline to nowhere we wanted to be a pipeline to somewhere that's the problem -- -- -- good to see it.
Have a good weekend this.
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