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00:00-- TRUCK BOWIE JOINS US NOW -- CHUCK BOWIE JOINS US NOW. YOU THINK THIS COULD GO TO OR THREE MORE YEARS. AT THIS POINT IN TIME, HOW MUCH CONCERN, UNCERTAINTY IS THE ESCALATING TRADE WAR CAUSING WHEN YOU LOOK AT THE STOCK MARKET? CHUCK: THANK YOU FOR HAVING ME, KATHLEEN. IF YOU LOOK AT THE OVERALL FUNDAMENTAL BACKGROUND IN TERMS OF ECONOMICS AND FUNDAMENTALS, IT IS QUITE POSITIVE WHEN IT COMES TO ECONOMIC GROWTH RATES AND EARNINGS. WHEN IT COMES TO INFLATION AND INTEREST RATES, THEY ARE STILL AT A FAIRLY LOW LEVEL EVEN THOUGH THEY MOVED UP A LITTLE OVER THE LAST YEAR OR SO. THE WE FEEL LIKE RISING INTEREST RATES COULD POTENTIALLY PUT A CEILING ON THE ECONOMIC EQUITY MARKET. RISING TRADE TENSIONS AND A TARIFFS, AT SOME POINT, ALTHOUGH IT IS DIFFICULT TO DETERMINE WHEN THAT WILL HAPPEN AND I DON ' T THINK WE ARE THERE YET, BUT AT SOME POINT, TRADE TENSIONS COULD CAUSE PROBLEMS IN THE EQUITY MARKETS. THROUGH THE REDUCTION OF ECONOMIC GROWTH RATES THAT IS. BETTY: I LOVE YOUR METAPHOR THAT -- KATHLEEN: I LOVE YOUR METAPHOR THAT WE MIGHT BE LATE IN THE MARKET CYCLE BUT WE COULD GO ON EXTRA INNINGS. WHAT WILL DRIVE THIS MARKET INTO EXTRA INNINGS? CHUCK: IT IS THE EARNINGS AND ECONOMIC GROWTH. I THINK IT IS BUSINESS FUNDAMENTALS. ONE THING WE HAVE LOOKED AT WHEN WE LOOK AT MARKET CONDITIONS TODAY VERSUS OTHER. OF TIME -- VERSUS OTHER PERIODS OF TIME, WE LOOK AT A PERIOD IN THE 1980 ' S, 1987, AND WHEN YOU LOOK AT SIMILARITIES BETWEEN THAT YEAR AND TODAY, WE THINK THERE ARE SOME COMPARISONS. THERE ARE A LOT OF DIFFERENCES, BUT THERE ARE SOME SIMILARITIES BETWEEN CONDITIONS BACK THEN AND WHAT YOU SEE TODAY IN THE MARKETS. HAIDI: I WANT TO THROW UP A CHART IN OUR LIBRARY THE GIVES AN OVERVIEW OF WHERE WE ARE AT. IF YOU LOOK AT THE S & P 500, THE VIX INDEX IS LOWER SINCE MID-JANUARY AND THE S & P IS STILL IN DISTANCE OF RECORD HIGHS. DOES THAT SUGGEST COMPLACENCY IN THIS MARKET GIVEN WE HAVE VERY LITTLE SWIFT BACK AND FORTH AND HOW QUICKLY THIS TRADE WAR HAS ESCALATING -- IS ESCALATING? CHUCK: I THINK THERE IS POSSIBILITY OF COMPLACENCY IN THIS MARKET. POTENTIALLY IN THE U.S. AND LARGE-CAP GROWTH STOCKS. MAYBE INFO TECH STOCKS INTO THOSE AREAS AS WELL. WHEN IT COMES TO AREAS LIKE LARGE-CAP VALUE STOCKS, THERE IS NOT NEARLY AS MUCH COMPLACENCY. I THINK THERE IS POTENTIAL VALUE THERE. THOSE ARE GOOD DIVERSIFIERS FOR INVESTORS. HAIDI: WE WERE LOOKING AT THE NUMBERS AND 4% OF S & P MEMBERS ARE AT THEIR 52-WEEK HIGH. 280 OF THE STOCKS ARE 10% OF THEIR ALL-TIME HIGH. IF YOU LOOK AT THE MARKET, IT IS NOT THERE. DOES THAT SPEAK TO A VULNERABILITY OF THE MARKET OR TO THE FACT THAT EVERYTHING ELSE HAS ROOM TO PLAY CATCH-UP CHUCK: I DON ' T KNOW WHETHER IT IS THE OTHER AREAS OF THE MARKET THAT HAVE NOT INCREASED AS MUCH CATCHING UP OR WHETHER WHAT HAS GONE UP LIKE INFOTECH MIGHT COME DOWN AT THE SAME TIME. THERE ' S A GAP BETWEEN LARGE-CAP GROWTH AND LARGE-CAP VALUE THAT IS SIGNIFICANT. IT IS 10 PERCENTAGE POINTS. THAT IS A LARGE GAP. AT SOME POINT, THAT WILL CLOSE. IT IS IMPOSSIBLE TO KNOW WHEN. IT IS LIKELY TO CLOSE LATER ON. KATHLEEN: I ' M PULLING UP A CHARTIER HEAR FROM OUR BLOOMBERG LIBRARY BECAUSE YOU SAY YOU FEEL THIS IS SORT OF LIKE 1987, RIGHT? THIS REALLY COOL CHART FROM THE LIBRARY LOOKS AT 1987, 1929, VERSUS TODAY. DON ' T YOU LOVE IT? IS WHITE LINE IS WHERE WE ARE NOW. THE BLUE LINE IS AROUND THE 1987 STOCK CRASH. SHE WOULD NOT COMPARE IT TO 1920 NINE AND STICK WITH YOU FOR 1987 WHERE WE HAD A BIG CRASH AND THINGS KEPT GOING AFTER THE RATES WERE CUT? CHUCK: WE ' RE NOT MAKING PROJECTIONS ABOUT THE BROADER MARKET. WE THINK THERE ARE SECTORS THAT ARE HIGHLY VALUED AND MAY BE READY FOR A SUBSTANTIAL AMOUNT, MAYBE 15 TO 25%. WHEN YOU LOOK IN 1987 IN PARTICULAR, YOU HAVE RISING INTEREST RATES DURING A. OF TIME, A FAIRLY SIGNIFICANTLY VALUED MARKET -- A PERIOD OF TIME, A FAIRLY SIGNIFICANT VALUE GROWTH -- VALUED MARKET. WE ARE NOT PREDICTING THAT AND DO NOT THINK THAT IS WHAT IS GOING TO HAPPEN. BUT, IT IS INTERESTING TO LOOK AT THE TWO YEARS AND COMPARE THEM. KATHLEEN: ONE OF THE BIG STORIES IN THE STOCK MARKET IN THE LAST FEW WEEKS WHICH IS WHAT HAPPENED TO THE SAFE? WITH NETFLIX AND FACEBOOK TROUBLE. THAT IS HALF OF THE MARKET CAPITALIZATION. WHAT DO YOU SEE FOR THEM AND HOW DOES IT FIT INTO YOUR VIEW OF THE STOCK MARKET TO CONTINUE GOING FOR A CONSIDERABLE AMOUNT OF TIME? CHUCK: I ' M NOT AS OPTIMISTIC ABOUT THOSE OF STOCKS. WE THINK BETTER DIVERSIFIERS, PARTICULARLY WHEN IT COMES TO PRESERVATION WHERE YOU ARE SAFE -- WHERE YOU HAVE SAFE DIVERSIFICATION, AND IN GROWTH ALLOCATION, INTERNATIONAL DEVELOPED STOCKS HAVE VALUE TO THEM. WE ALSO THINK U.S. LARGE-COMPANY

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Rising Rates, Trade Tensions Could Put Ceiling on Stocks, RGT's Thoele Says

Chuck Thoele, RGT Wealth Advisors chief investment officer, discusses the impact of escalating trade tensions and interest rates on global equities with Bloomberg's Kathleen Hays on "Bloomberg Daybreak: Asia." (Source: Bloomberg)

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