The Mullet Portfolio with Cameron Dawson of NewEdge Wealth
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Well, I'm excited to speak with Cameron Dawson. Before that, a little housekeeping. On June 5th, our second Fast Money Live will be taking place at the NASDAQ. The first one was unbelievable. The energy in the room, just getting to meet everybody and chat with people, have a little Como's tequila. It was wonderful. But we have a special offer for our...

risk reversal podcast listeners just for our listeners here go to fastmoneylive.cnbc.com fm25 we secured a very special rate it's only for our listeners and our viewers it's not going to be around for too long we're also going to throw in some really cool risk reversal swag for all of our listeners who go and buy the tickets there just send

a screenshot of your email to [email protected] and you get that swag, guy. - We look forward to seeing you there. I can assure you it will be a lot of fun. So June 5th, NASDAQ Fast Money Live. See you there. - Welcome to the Risk Reversal Podcast. Guy Adami joined by Dan Nathan. And now for the seventh time since we've started,

the great Cameron Dawson, she the chief investment officer at New Edge Wealth. Last with us on January 3rd of this year, our first guest of 2025, Dan. Yeah, we started, we got in this year hot, Cameron. So we welcome you back to the podcast. You're making your quarterly appearance. We appreciate it. Happy to be here. Big week.

Big a lot of things, Cameron. And by the way, a lot of the things that you talked about in January and we're talking about last year are starting to play out. So maybe we can start from January 3rd and go to today. And what surprised you the most? Well, we published our outlook in the middle of January. And the reason we do that is so that everybody else can do their outlooks first and we can see where consensus is. It's like guessing last on the price is right.

And so when we published the outlook, we called it great expectations because we looked around and we saw everybody had huge high hopes for the market, for the economy, for policy going into 2025. We said, look, it's not as if bad or good things can't happen. But if your price for perfection, if you have positioning that is in the 96 to 100 percentiles, depending on where you're looking at in the market, if everybody expects

only good things coming out of Washington, you have zero room for error. You have zero room to absorb any bad news. So we thought that the end result would be a sideways market through the course of 2025. We pushed back handily against the idea that you'd see 7,000 plus on further multiple expansion for equities. Just didn't think that starting at 22.6 times forward, you had a lot of upside in valuations.

So what we thought is that at best you would get a rally to the size of earnings growth, but what was more likely is that you'd see downside moves because of multiple compression because of negative news coming in. So what's interesting, I think what's changed in that outlook is we're asking the question of if our thought of a line, a straight line for the year and kind of oscillating around that is now shifting more with a downward slope. Meaning do we think that we could actually see more than, than,

you know, a 10 to 15% correction over the course of the year that we did touch briefly that 18%. Yeah. You know, coming into this year, and I think that's really interesting that you called it great expectations because there was just a lot of excitement in and around, you know, from November 6th on. Right. And so you had all what they call the Trump trades. And, you know, a lot of them had started to kind of roll over a little bit and,

you know, by by mid-January or so, despite the S&P making, you know, a brief new all time high in mid-February. And, you know, some of the data was weakening. Right. You know, just some of the momentum to the upside and some of the risk assets that you would kind of associate with a strong economy. And so, you know, it was our view that it felt a lot like late 2021. Right. And so there was a handful of names that were still working, but a lot of them were falling by the wayside. So so

Talk to us a little bit about the economy, you know, heading into this year, because it's one thing to say that the stock market was starting to roll over and some of the stuff was starting to kind of look worse under the hood. How are you feeling about the economy? Because back then in February 19th, we just couldn't come up with a good reason why the S&P would break out and establish a new range of the upside.

Yeah, and I think just to bring it back to that notion of what was similar to late 21 is that you had also started to see fading momentum on a weekly standpoint. So one of the things that was jumping out to us is that the weekly MACD had been moving lower for really the last nine months.

You also have been cutting earnings estimates since July. So we were calling the second half of the year the rally on air. It was just all multiple expansion, even though you were trimming EPS estimates from 274 to now they're sitting at 268 for 2025. So that set you up for this volatility because you again, you had zero cushion given how high valuations are. Then it's the question of do you get confirmation of this weakness from the from the underlying economy? And the hardest part of

of the last, let's call it three years, has been discerning if soft data would morph into weakness in hard data. It certainly wasn't to the opposite where strong soft data right after the election certainly didn't create better hard data in the coming months. And so we're sitting at a point now where we could say the same thing today as we saw, as we've been saying the last few years.

Peripheral data is weakening. The question is, does the big data weaken? And we think that the rise of tariffs and the degree of the tariffs that are being applied raises the odds of the big data weakening, but it could happen at a slower pace than people expect. And this is where it gets really squirrely because we're calling it the Wile E. Coyote moment, where if you look at the data today, it likely will continue to look okay.

probably because the labor market is very much a lagging indicator, but also because of pull forward of demand. We've seen a lot of pulled forward activity from industrials, manufacturers, as well as from consumers, which could skew the March and April data to look as if it is better than underlying demand, which then we can talk about what that means for the Fed because it puts them in rather a pickle.

I'm with you. It's funny you talk about less and less room for error for the market. That's something we've said for a while. And you talk about it, we talk about it. The metrics that we look at are not timing indicators, PE ratios. But there are certain things out there that absolutely flash red. One of them was that Buffett indicator, which, by the way, is still elevated. But another one is like the Shiller PE ratio, the CAPE ratio, which historically trades around 17. And even with the recent sell-off,

We're looking something in the mid 30s. Again, not a timing indicator, but it suggests the market has less and less cushion. So despite the fact that we've sold off in a pretty meaningful way,

you can make an argument that the market's still expensive here and nothing's really changed on the valuation front yeah the market is still trading at 19 and a half times forward earnings and it raises an interesting dynamic where high valuations have a lot more room to fall low valuations have a lot less room to fall and it reminds us of probably one of the greatest prognosticators in markets of all time which is pitbull who said the biggest bigger they are the harder they fall and that is the reality of

the dynamics when we see if you look at mag seven and these high beta tech names that you see a lot more room for air to come out of those multiples. The challenge is at 19 and a half times in a market multiple though, it ain't cheap. That still is a very fulsome multiple that in a realm where you are cutting earnings estimates, cutting GDP estimates,

potentially seeing capital flee the U.S., you have yields also moving up, 19.5 times is not all that alluring. It just is that people are stepping in because they go, well, we've had a 15, 10% correction, but that's because you had a starting point of 22.6 times. I'm not calling this the same as the tech bubble, but it's a good analogy to remember that the 2000 to 2002 economic weakness in bear market was,

was a very mild correct mild recession it was not a big recession however it's a massive decline in the s p 500 simply because multiples had that much more room to fall which is why we say they're not a good timing tool but we see them as effectively the amplifier of a move the higher starting point you are the bigger the move you have to deflate that multiple

all right what do you make of in 2022 right and during that bear market um you know you just highlighted the fact that at 19 and a half times or something it seems expensive historically in 2022 you know

Outside of the concentration of the largest, let's call them 20 names, the 480 did trough at like a 14 or something like that. So how do you think, is that important as we think about it, as we kind of take out some of the biggest names? Because they're also huge contributors to that $268 of earnings for the S&P 500. How do you think about that?

Yeah, I mean, it does suggest that there's room for fishing and room for finding value, even if the overall market is still derating because of the highest parts of it still have room to come out. But to your point, it really depends on the E.

And the E is the big, huge question mark here. And I think it's helpful to talk about the E in the context of the 493 and the E in the context of the MAG-7. I think that there's a perception that the MAG-7 earnings are not cyclical and very resilient.

I don't think that that's actually the case. 2022, of course, you saw a name like Meta, Facebook at the time, saw its earnings, its top line revenue decline for the first time in its history. Why is that? Meta's 98% advertising. So it depends on economic growth. And remember, people were expecting a recession and pulling back on advertising.

Now, the way that we think about it is that these Mag7 names have better business models, high free cash flow generation, strong return on invested capital, and that really benefits you in a low growth environment because you're able to outgrow the rest of the market. The question is, are they...

defensive in a weak growth environment. We think that there's still cyclical names. Yeah, you know, it's interesting. And that's a great point. Think about Apple. So today it's Monday. You know, Apple was a very hard hit stock as it was meant to be right in the eye, right in the sights of this kind of trade war as it relates to China. You know, you could make the argument

that obviously Apple, Tesla are very discretionary spending. If you think about it, Tesla's are very expensive relative to some of the competitors here in the US as far as full EVs. Apple- Nice picture, by the way. Which one? You and the Tesla. You saw that. Of course I saw it. By the way, that was fake, A, and B, they used Fat Dan from a few years ago and-

I didn't really appreciate that, but that's fine, Diaz. Thank you very much for doing that. So you can make the argument that Apple, without any reason to upgrade for AI, Apple Intelligent, is discretionary. Tesla is expensive. And then all of these other names, let's get rid of NVIDIA and Microsoft, they're all really dependent on advertising. These could be some of the first stocks hit in a recession. Does that make some sense too? Yeah, and it...

well, Microsoft is also dependent on employment. If you're not adding new employees, you're not getting new Microsoft Office subscriptions. All of these companies, and even a couple weeks ago, Satya Nadella was on CNBC on their annual

anniversary day of Microsoft. And he was asked about whether or not they would still be doing big investments in data centers. What would the ban be like? And he said, look, it's GDP dependent. And that's huge. So people have this perception that it is so idiosyncratic that it does not breathe the same economic air. And that's a great Peter Bookvar statement. We all do breathe the same economic air.

there's no sanctity to these capex. I mean, we've talked about that for a while. So let's walk out a little bit here because what we've seen over the last couple of weeks in the U S bond market, the United States dollar in a word has been historic. And I think last week,

the administration was not necessarily scared. They were bothered by the stock market move. They got scared by the bond market move and they should have been scared by the way. So what are your thoughts on what you're seeing? Because we're seeing until the last 24 hours or so,

Rates higher, dollar lower, which, by the way, is a trend I think will continue. Yeah. So it ain't healthy when you see a 50 basis point move in one week and what is supposed to be the most liquid market in the world. So that's the 10-year Treasury. And the Treasury market overall is supposed to be the most liquid. And it didn't quite

Sees up but 50 basis points is a big move now where we did see a full seizing up with things like the muni market The muni market had its worst day in 30 years last Monday So clearly there are signs of liquidity strain and it always raises the question as to why these things are happening We know that there was a big unwind in the swap spread spread trade before

from hedge funds that caused selling within treasuries. We also have this theory out there that if you combine the move of higher treasury yields with a much weaker dollar, are you seeing foreign holders sell their bonds and not buy dollars and sell their dollars, reduce dollar reserves?

That is a little bit harder to measure and harder to find exact evidence of we've had anecdotal evidence of it from from a somewhat piecemeal, but when you start putting it all together you say well that could be happening at the margin and our view on that is that if

Even if you don't have the evidence, if you fear that a big owner of something, a big whale is selling, then wouldn't you get ahead of it, which is why we think we saw such a big move. Then you have these concerns about the deficit as well. And you have the passing of this reconciliation bill, which includes a huge increase to the deficit. And they can say what they want to say about current law and baseline.

The reality is that it necessitates more treasury issuance depending on the mix of where it is in the curve. So all of this is to say is that no wonder bond yields backed back up. And the question that we keep asking is that if data starts to roll and the Fed eventually reacts, do bonds act as that same kind of safe haven on the other side? Do you get that same kind of flight to safety? Well, okay, so let's play it one more step forward from there.

We think here in the United States, we hold all the cards. And you've heard that. We control things. But when two of your biggest, well, specifically your largest rival is the second largest holder of your debt, do you really have the hand that you think you have? And then you throw the Japanese as the first largest holder of our debt. And then you start to say to yourselves, well, maybe we think we're sitting pretty with pocket aces, but

maybe not so much in terms of what we just saw on the flop. So thoughts about that? Yeah, it's like the scene in, is it Captain Felix? I'm the captain now. Right. I'm the captain now. I'm the captain now. And look, and all is well and good until you lose the bond market. And the reality with China is that we've been seeing them reduce their dollar reserves for a very long time. They've been reducing their, sorry, their treasury holdings for quite a long time. It's been over a decade. You can see the chart on

over a long period, it's been a steady climb down. So this is just a continuation of an existing trend. I'm not an expert on the Japan situation, but they are the largest holders, so keeping them on sides is incredibly important. And the question is, does that factor into trade negotiations? Seems like a pretty wild thing to be bandying about in those negotiations. So I think, look, markets are made at the margin, and so you don't have to have a full contract

complete protest against US assets, but if at the margin people are saying, "Eh, maybe I'll buy some euros." Not saying the euro's perfect, not saying the eurozone is perfect, not at all, but it's at the margin that matters. - Well you know what they've been buying, I mean the Chinese specifically, and you know this, they've been buying gold for the last three and a half or four years, and obviously-- - Parabolic.

Is that sort of the end game here? Because I think there has been a significant amount of central bank buying over the last three years, historic in nature, doesn't seem to abate in any way. I mean, the gold trade seemingly is alive and well in this environment. Well, we've known that there has been this bid for gold from central banks because at the margin they're saying we don't want to be Russia'd.

in the future if something were to happen. And that's the weaponization of the dollar. That's the idea of using sanctions and pulling dollars away from different central banks as a form of punishment or as part of kind of general warfare. And the question is, does that mean that other countries do not want to hold your dollars or your treasuries because they're afraid that could happen to them too? That has happened.

That's been the last three years of gold reserves going up because at the margin, people are choosing gold over the US dollar. I think one thing just to note is that at the end of the day, when we stand back from all of this, it's really hard to determine short-term moves versus big long-term trends.

The dollar is still the most liquid, the most used, the most safe currency and asset that central banks can hold outside of gold. So the point with it is to say that these movements are happening at the margin doesn't necessarily say that the end of dollar dominance is over. All right, Guy. On Friday...

Cameron wrote a note. We are never ever getting back together. I think she was channeling G swizz a little bit Like a song it's a Taylor Swift Of course you've come in here hot on many occasions with some classic rock sort of lyrics and he gets them right away So I just did Radiohead a couple

That's dense. Which one? Okay Computer. Well, so I did Karma Police. All right. Okay. We see what you did there. I like Karma Chameleon better than Karma Police. By the way, Karma Police is on- Wait, no, no, no. There's no way that you like Karma Chameleon better than Karma Police. You want to look at my Spotify playlist? That's embarrassing. Oh, my gosh. Boy George, the harmonica in Karma Chameleon is next level. Stop. Back to you. Karma Police is on the Okay Computer album, actually. Let's bring it back to China for a second. Okay.

So your point of that note was that this is not going to be the sort of trade war or at least the opening salvo that I think the White House thought it was going to be. Is that fair? We just talked about on the margin selling debt, selling dollars, that sort of thing. It seems that they do have more cards to play than we probably thought of coming at them so hard. One of them is like they put in export bans for really important things like rare earth

materials and that go into batteries and a whole host of other things so how do you think this is going to play out in my mind the only way this sort of ends is some sort of like summit between trump and she it's probably in riyadh you know what i mean it's going to be like this weirdo sort of geopolitical mismatch of of folks here and they're going to do what they did last time in 19 there's going to be phased in this and none of it's really going to happen they're just going to leave the existing tariffs on

and go from there. And I don't mean 145%. I mean, like, whatever, 25%.

This would be a lot easier if we knew the purpose that they thought that these tariffs played. Right. And I don't know if they know the purpose that these tariffs play. So there's three big main purposes that the tariffs can serve. The first one is as a negotiating tool for something else. So think fentanyl, think immigration, that the tariffs are used as a bargaining chip to bring people to the table for other kinds of negotiations.

The second big purpose that the tariffs could play is to reorient global manufacturing to say, hey, if we put up enough walls and barriers around outsourcing jobs that people will be forced to choose the U.S. That, of course, is a much longer term kind of

outcome than the first one, which is a negotiation. So the tariffs are on, they're off. And once you get what you want on the other side, the last one is a really interesting piece, which is tariffs used as a structural way to raise revenue for the government.

So if you see tariffs as effectively a new tax in order to pay for tax cuts other places or to pay down debt and deficits, that those tariffs would have to be there for longer. They will not be negotiated away because you're counting on that revenue in order to pay for other things.

If that was the case, if the last one was the case, there's no reason why you would put 145% tariffs on China because we all know the Laffer curve. Remember the Laffer curve that at some point, if you cross a certain tax rate, your tax revenue actually starts to drop. You get to the point where 145% is so onerous that you would just do no trade, look at five below saying we won't take any volume from China anymore. So it...

What we don't know is what the end game goal and maybe they don't want us to know because in a negotiation, maybe you shouldn't know what the end game goal is. But we don't know what role these tariffs play and maybe they're different for every country. I don't think the administration knows. If you just think of this past weekend, what came out Friday night about the exclusions for tariffs and then what was said by the Commerce Secretary of the weekend and then the tweets and stuff like that.

by the president, it just doesn't seem to be there's any clarity about what they're trying to achieve. That last bit is really interesting because I've heard, you know, very smart economists talk about that. But in a way that you just talked about, it is something that could be the outcome, right? If you want to reorient global trade in the long term, you know, I've heard people talk about replacing a sales tax with these sorts of tariffs. And I guess that was, you know, done about 100 years ago in the lead up to the Great Depression. Here's the thing.

if they think they're going to raise revenue and I want to get your take on it. So it's kind of a question by doing these tariffs long term. Right. And then put through a big tax cut. Right. For very wealthy folks. That is going to be one of the biggest miscarriages of, you know, like capitalism that you've ever seen, because what it will do is got any further than that could be happened. The middle class and those aspiring to be in the middle class. Does that make some sense?

Yeah. Look, tariffs are a regressive consumption tax. So the people who have a greater propensity to consume a larger portion of their income tend to be lower income people. They consume more things that would be tariffed. And so the burden falls disproportionately on them versus those that have the excess income to be able to save more. So the challenge you have is if you pursue a big consumption tax, and a big consumption tax is what this would be, on individuals,

in an economy that is 70% consumption, then by definition you will get a growth slowdown. So we actually think that the way that these tariffs will play out through the economy is that it's far more likely that they are dampening on growth than they are causing a...

of inflation. So we do think that we get a step up in inflation, which puts the Fed into an interesting position, but that the end result is that growth is just continuously pressured down. And we know this because you listen to a company like Walmart, who is effectively saying, hey, we don't think we can raise prices that much. We are going to pull our profit guidance, keep our sales guidance, because if we push price too much,

consumers are going to push back and consume less.

So we think that the risk that you have is that they pursue this, what could be a very dampening to consumption growth type of policy. And then to your point is, what are the tax cuts that you get on the other side? Do you get potentially consumer-oriented tax cuts, child tax credits, et cetera, I guess things like no tax on tips being thrown out, no tax on Social Security, or do you get corporate tax cuts and

that may be not as stimulative to growth in the short run, so you get this air pocket. - We had Commerce Secretary Howard Lutnick on Fast Money last week, and I asked him the following question, and I knew he was gonna sort of punt, but I wanted to ask you. So I can see how at times trade deficits are a bad thing, but I don't think by definition every trade deficit is a bad thing. But I think this is an administration,

that looks through things through the lens of winning and losing. And if you have a deficit with somebody, you are by definition, in their opinion, losing. I think that's flawed. Thoughts on that? Because I think that way of thinking creates a lot of problems in terms of putting forth these tariffs and then trying to do policy on the back of it. We all took Econ 101 and we all learned about comparative advantage. And it's not to say that there isn't

bad act there aren't bad actors and there isn't bad behavior in global trade but there are just some things that we cannot produce in the U.S. and some things we cannot produce efficiently in the U.S. and there are countries that are poorer than us that cannot buy as much from us as we do from them so it's not to say that you aren't

Trying to solve some bad or unsustainable trade practices. We can all agree that there are that those do exist. But by simply saying anybody with a trade deficit is getting tariffed is is, you know, it's not taking a scalpel to the problem. It's, you know, literally firing a cannonball at it and hoping that you perform surgery well.

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Hi, everyone. It's Guy. You've probably heard me mention Current before on the pod, but we can't stop talking about how easy managing all your money is with their app. It helps you grow your savings, you can build your credit, and it works for the entire family. Plus, with their new Paycheck Advance feature, you can get up to $500 before payday when you switch your payroll and qualify. No credit checks or mandatory fees required.

It's super easy to sign up. Just go to Current.com slash OK. O-K-A-Y. That's Current.com OK to get the app.

Thank you.

Let's talk a little bit about the pace in which the S&P sold off due to all this uncertainty. Right. So let's just be clear. If this wasn't a policy induced sort of sell off. Right. We would not have had the sort of like

you know, risk assets going haywire the way they did this, the, you know, treasury weakness, the dollar weakness. We can all deal with a 10 to 15% sell off in stocks. We get one on average every year, right? About 12% or so. When you think about the way in which we went lower,

How do you think about the fact that it's just not that bad right now as it relates to equities? Could this be fixed in the near term or have we already seen too much pressure on growth and on earnings, right, that we can probably get out of this in, let's say, a few months? It's going to take a few quarters to work itself out. Does that make some sense or no?

so the first one is to your point of the rapidity of this we published a few weeks ago a bear market price target of 4 800 on the s p 500 and published it and kind of slid it across the table and went don't freak out but this could happen and then it happened in three days which was just incredible that we got there within three days of publishing we went oh

darn it, this doesn't work. And the reality is that you reset so quickly. Now, of course, you're seeing a rebound because you got deeply oversold externally, internally. So we're not surprised to see the rebound. You also have seen probably what was the peak worst tariff headline in the sense of the maximum tariff rate has now started to be walked back.

Now here's where it gets interesting though, which is that we haven't even begun, not even started to see the impact to real data. And we are of the camp that we think that this will impact real economic activity. So meaning that eventually once you get into later in the second quarter, you'll start getting data releases that don't look so hot.

So it's one of our reasons what we're thinking that we get a bounce, but it's not a V-shaped recovery back to new highs. We don't look in the rearview mirror and say, well, that was rough. But that we get stuck in this volatility because we think that the data releases will cause some of

of this continued earnings revision lower, as well as pressure on valuation. So it's one where we think we rally up to resistance around 5500, 5700, then there's risk that you roll over and that you continue to chop from there. - Yeah, it's something we've said on this show as well. So I'm glad you feel that way.

The 800-pound grill is what's going to happen in the employment picture, which is something that I've been concerned about probably unjustifiably for a long time. But there are definitely some cracks out there. So what's sort of your base case here for the employment picture? Because as you just said, you know, first thing companies are going to start to do when they can't pass on costs is to start to fire people. Yeah, it's such a critical point because if you go back to 2021,

and 2020, the inflation that we had in 2022, the inflation that we had during that time was passed directly on to consumers. You also had labor scarcity. So companies were able to raise prices, see their margins expand through a cost pressure environment because consumers could absorb that higher cost.

Now you're in an environment where companies can't pass on those cost increases and they will have to either absorb them like Walmart is doing or just see reduced demand. Both of those things suggest lower margins, which means you're going to look for other places to be able to save on costs. So one of the things that we watch is the small business survey about sales being –

having a negative outlook that typically has led unemployment if you continue to see signs that companies mostly small businesses are thinking sales will soften that would suggest that unemployment could weaken further we've been seeing weakness in the peripheral labor market though data for a year and a half and it hasn't resulted in weaker non-farm payrolls so you know it's it

It feels like any day now we could start seeing that softness. But a good important point, we don't think it will happen in April. The April survey period, I believe, ended on the 12th. And so people probably haven't fired people in response to tariffs yet. But that means that we might not see weaker economic data until mid-summer, June, July, which means that the Fed, which has been resolutely telling us we will not –

change policy until we get clarity. Clarity for us means weaker hard data, means that they sit on hold, not in May, potentially not in June, and we would put our first cut if data weakens, more likely to be July. All right. So let's talk about Fed Chair Powell. He speaks Wednesday afternoon. We have ECB, which might be really interesting. I think that's on Thursday, and then we don't have a Fed meeting until May 7th.

We pretty much had all the inflation data. Isn't that right? We had CPI, PPI last week. I think, you know, the headlines were it was a little cooler than some people expected. But to your point, it may take a little while to see some of these inflationary pressures. We might hear that a bit more right from companies as we get further into Q1 earnings and the lack of visibility they have. I'm sure they're going to blame it a bit on inflation. Going back to 2018, we had a growth scare. The S&P sold off 20 percent in a few months. The Fed pivoted.

Right. They went from, you know, slowly raising interest rates. I think they got fed funds to two and a half percent and then they got pretty dovish. What does a pivot look like? Because we're not going to see inflation rollover. The dual mandate is stable prices and full employment. So if unemployment goes

starts to go up and inflation stays put or starts to go higher, what do they do right there? Because that's obviously stagflation. Yeah, it's stag, stag, staggy. The question would be is do they do things –

as well in that environment to stabilize the bond market. Because if you go into a stagflationary type of environment, you could imagine yields gapping out as well because you don't have the same bid for bonds that you would normally think you would get with a weaker employment environment because of the inflation expectations, inflation picture. And so could we seek sort of like this backdoor QE from the Fed where they go in and stabilize the bond market with liquidity? Remember what they did with BTFP during the

the meltdown of regional banks where they came in and had a discount window and let people borrow against at par that added liquidity into the system in a meaningful way and helped stabilize overall markets so i look we we think that the that the fed's back is against the wall and that they don't want to be political they don't want attention which just suggests further patience and saying we have to have confirmation in the data because imagine if pal had come out last week and said oh my gosh

Every study says that growth is going to weaken and inflation is transitory with tariffs. We're going to cut rates. And then all of a sudden you get this flip-flop and 90-day extension. They don't want to be caught in the middle of that. And so we think that until you – it's not until you see the weaker data actually come through that they will take action. Do you think Jerome Powell makes it to – I think he's May of 26, right? I think that's his –

I ask that because the – well, whatever's – the Constitution – I think it's in the Constitution – whatever amendment, you can only fire a Fed official, which the Fed chair is one of, for cause. And cause is not he or she disagrees with your policy. Cause is for, I'm sure, pretty obvious things that are stated.

But I think it was last week or two weeks ago, President Trump declared an economic emergency. I don't know what that means. I know what the words mean. I don't know exactly what he's saying. But I think it was to set up for, in an economic emergency, the Federal Reserve needs to lower rates in order to get us. And if they don't sort of oblige or sort of comply, that's grounds for dismissal. What happens if that happens? The long end backs out?

I mean you would have this this in gold probably does really well meaning that if you don't have an independent Fed I think that people get more and more concerned about dollar debasement you know our head of portfolio strategy Brian Nick is incredibly a student we've had been having a lot of debates about how long the Fed chair could last and does he get pushed out and don't forget

Prior to being named Treasury Secretary, Besson talked about nominating a shadow Fed chair. Yeah, I know. And then he backed off of it again when he was nominated because there was on both sides of the aisle, people went, what? No, no, no. Like this is actually there's a sanctity of the independence of the Fed. But, you know, could could that be something where Besson is considered for a Fed chair? Don't don't rule it out.

Look, anything can happen. Well, does that make you nervous? If you have somebody like Besant, who obviously has been a bit of a sycophant for Trump here, if you put him in the supposed, you know what I mean, separated Federal Reserve, that's kind of dangerous. Don't you think so? I mean, like on the flip side, you had, you know, Fed Chair Powell, you

You had Fed Chair Yellen go and be the Treasury Secretary. Those are two very, very different jobs. I'd almost much rather see it go that way than the opposite way. Does that make some sense? Yeah. Look, there's a great book called Four Days at Camp David. Highly recommend it. And it's about the

time right before Nixon decided to remove the U.S. from the gold standard and all the goings on about it and what's great about it is that he profiles all these different people, all the different players and one of the profiles is of Arthur Burns and one of the key things of Arthur Burns'

going down in history and not being able to fight inflation is because he had Nixon turning the screws on him and saying, you got to do this. You have to, you have to cut rates. The economy is weakening, even though inflation was, was turning higher. So the, the history of, of,

deterioration in the independence of the Fed has not been good for financial stability, nor has it been good for financial asset returns. So we would hope that that would be something that would be preserved. All right, let's level set this for a second here. Let's get back to the market. So you had this 4,800-ish target. We went and we kissed it and we bounced off at your point. We were extremely oversold. The sentiment was really bad. Some of the stuff that was going on in other markets was really hard for

you know, some equity investors to get their arms around. So you had max fear. So we bounced back. It's 5,400 here. Let's just say we have a calming of this back and forth with the news and then investors and companies are able to kind of get their hands around it. What are some sectors that you'd want to go to first? If we've seen somewhat of the, let's just say mid this year is going to be the worst part of the hard data.

Yeah, I mean, I would imagine something like energy is probably one of the most oversold. But you want to buy that into kind of confirmation of hard data being weak. Effectively, oil is sold off really aggressively in anticipation of hard data rolling over, saying demand's going to be weaker, and so we don't want to own oil.

I think that in that scenario, usually once hard data starts confirming concerns about growth, you start seeing defensives start to begin to underperform simply because they outperform in anticipation of weaker data. And so it's sort of a buy the rumor, sell the news, or the opposite of it. The other thing, and I think Jeff DeGraff has been pointing this out, and it's a really good reminder, is just that beta has –

been so underperforming that you could see beta rebound pretty rapidly, at least in a short period of time. And I think that what could happen is we breathe a collective sigh of relief. Markets rebound off of this oversold level. You see the market trade back up to 20.

and a half times earnings and all of a sudden we look around and be like wait a second unemployment rates going up fed's not really willing to cut very quickly and earnings estimates need to be cut further oh my gosh and you start to roll over would be our would be our our our kind of scenario analysis of how 2q could play out

play out yeah so it's an hour to the close here on monday and obviously there was a lot of enthusiasm about you know this exemption supposedly um of let's say you know apple and a bunch of semis and the like and so you just mentioned defensive and i think this is really interesting because the s p is up 1.1 right now i see staples up nearly two percent and i see utilities up nearly two percent so

How do you square that circle? Do you think investors are approaching this with a sort of barbell sort of strategy here a little bit? They want to still have access to the offensives. That's the point about gold also, right? But, you know, they're trying to pick at individual names like you mentioned here because I'm

a lot of the damage, you know, if the S&P is down 8% of the year and the NASDAQ's down 10%, you know, those largest names are all down at least 20-some percent, some 30-some percent. So, you know, the idea there might be some opportunities, um,

you know in and around some of these names that have gotten really killed so I'm just curious as your thought to on a day like today when you see some stuff bouncing like Apple up nearly 4% but also you see utilities and staples and gold maybe the term for it is the mullet portfolio business defensives in the front and party beta in the back I mean that's

That's the title of the show. Yeah, the mullet portfolio. Look, I think that one of the key messages that we've been giving to clients since the beginning of the year is that

it was far less important where we ended the year, far more important what you do with the volatility over the course of the year. That returns are going to be made this year by being able to step into peak periods of uncertainty and fear, which means that if you start going across the spectrum of names and say there's names that are down 30, 40, 50 percent,

I might not be catching the bottom. There might be another 10, 20% to go. But if I look out two years, then my forward return should be better in some of these names. Some of them certainly catching falling knives, which is a risk.

But, you know, I think that at the end of the day, if you are buying stocks because you think you're going to V-shape recover, you're doing it wrong. If you're buying stocks because you think in two years you'll look back and say, you know what, everybody was scared and it was a good buying opportunity. I had to deal with a lot of volatility. It didn't feel great at the time. It didn't feel great for a few months. We think that that kind of setup or at least mindset going into being acquisitive is the one to have.

Cameron Dawson, seventh time has been a charm, but there will be an eighth, ninth, and tenth if we have anything to do about it. Thanks always for joining us. Thank you.