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00:00His comments today were really perceived by the markets as pretty hawkish, perhaps opening the door to a 50 basis point rate hike just this month. Where do his comments put the rate trajectory for you? Sure. I mean, I think that was a terrific montage of Jay Powells commentary today to Congress. And he certainly took a lot of the enthusiasm out of the market that we've seen most recently. What we heard, though, loud and clear is that he's going to stick to that 2 percent mandate for inflation. What I think we were hoping for, perhaps the markets were, too, was that there would be some commentary. Hey, you know, we're making progress on inflation. We want to keep the economy in good shape. We don't want to torpedo this. So, you know, maybe there's a little bit of wiggle room for that. No, we didn't hear that. However, what we did hear is that Jay Powell and friends at the Federal Reserve continue to be data dependent. So they're going to look to the jobs number, the PPE numbers for next week's CPI also. I'll just, you know, take a breath and say that the problem with those numbers is they're backwards looking. And this is not a you know, this is not a sharp knife that they're doing surgery with. This is a dull knife. And so we're going to keep looking at the data, but it's not going to be quite as I think, easy for them to navigate this as as they seem to think that they by their comments to Congress today, given what you are saying. What's the chance, then, that we might see a deeper recession than originally thought? And does that change your portfolio allocations or how you strategize in this market? Got Sherry, thank you for that question. I don't think it's a question of whether or not we are going to have a recession. I think when you've got tens and 2s, meaning the 10 year Treasury yield is below the 2 year Treasury yield, two year treasuries are higher yielding than 10 years over and over. We've seen that that's foreshadowed a recession. So that's been going on for a while. So it's no big surprise that potentially we're going to see some negative growth in the economy. The question then is, is this going to be a shallow recession or a deep recession? And we're set where it is firmly in the camp of this is a shallow. This could be a shallow slowdown in growth. Why do we say that? We're coming into this with strong a strong jobs market, decent consumer spending. We're closer to the end of these rate hikes then than we were three, six months ago. And so what that means for our portfolios is, of course, heavy on treasuries, short term treasuries. That's where you want to park your cash. You can make 4 or 5 percent on that when you can make nothing on cash, but certainly want to have exposure to the U.S. stock market as well as international stocks. We think that we're going to see some more weakness in the U.S. dollar. We're at a 20 year high in the U.S. dollar. That's not sustainable. And what does that mean? Weaker, weaker dollar means stronger international stocks. And we want to make sure our clients are not underexposed and are certainly going to benefit from that in the next six to 12 months. Yet tell us about what you want in terms that international exposure. What are your preferences? Well, I think a combination of international developed and emerging. I mean, to pretend that we're you know, there's no geopolitical risks. That's that's the common pushback we get on this argument. What we're comfortable with international develop. But isn't there a war in Ukraine? And we don't want to minimize that. But this is a deep value play. Europe got beat up much more than the US in 2022. And what that means is they can rebound more strongly in 2023. So as this year, as rising interest rates kind of stop, which we think they'll happen in the next couple few months and they start to perhaps retract, we're going to start looking towards earnings and we start looking towards value and start looking towards income over start looking towards dividends. And what does that all point to as deep value in Europe, international developed some exposure to the US and certainly keep that keep those positions on into treasuries. That's where we've got clients positioned right now. You don't have a huge amount of exposure when it comes to fixed income. Right. How compelling are you finding the whole story right now? Well, that's interesting. We're at a conference where the biggest, the biggest choice for poor people is distressed debt right now. And when everyone's saying let's buy distressed debt, but at the same time, they're worried about the economy. That just doesn't add up for us. So our contrarian view is to stay short in duration on treasuries. We don't have any exposure to corporates. We don't even have munis. We don't have distressed debt. We don't have high corporate bonds. We just think that I use aren't there right now. The spreads are are too tight. And so what our bar build approach and we've been talking about this for a while, treasuries on safe side, exposure to deep value in Europe on the long side, as well as to U.S. stocks. And that's what we think is is the best risk adjusted return portfolio for our clients right now.

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Zuma Wealth's Spath on the US Markets

Zuma Wealth founder and Chief Investment Officer Terri Spath reacts to hawkish comments Fed Chair Jerome Powell made before Congress Tuesday. She joins Bloomberg's Shery Ahn and Haidi Stroud-Watts on "Bloomberg Daybreak: Australia." (Source: Bloomberg)

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