00:00 Speaker a
Let us welcome Nancy Curtain Alti Tidderman, Global Chief Investment Officer. It's great to see you, Nancy, live.
00:07 Nancy Curtin
Very happy to be here.
00:08 Speaker a
So we're just talking about this market and I want to think about it because it's been Nancy, a crazy journey. We have liberation days, headlines, reports and dramas, and the blood of the streets. Then rebound. When we talked at the first place on the show, now the S&P 500 has become positive this year. How do you do it? How do you explain this to your clients?
00:48 Nancy Curtin
Well, first of all, we are long-term investors, so we keep consistent throughout the process and tell our customers not to panic. Don't try to sell at a low price and get back on it, thank you too, because you can never predict when the market will turn around. They turned a dime. Now, I haven't seen this weekend, uh, now in China, what Beth manages to achieve is surprising. Well, obviously we have 90 days of pause. We are a little cautious. Again, we did nothing. Well, we are long-term investors. We think our location is good. Well, we are very diverse, so our customers do navigate in the turmoil, uh, good. So, but I think, you know, we are cautious. The market has moved a lot here. Well, trade deals, let's think about it. The trade agreement was with Lois, because what he obtained with the UK was a five-page agreement, namely a letter of intent. What happened in the UK was a five-page written agreement, with more questions than answers. But I do think this sets up some frameworks. I mean, don't expect tariffs to disappear. We believe that the 10% benchmark tariff will remain mandatory. China will be higher, otherwise we will negotiate with other countries. But don't expect tariffs to disappear. So, you know, tariffs do have negative effects. So we do see a slowdown in the U.S. economy.
03:03 Speaker b
Do you think, especially as an international investor, well, do you think there is a more permanent blow to foreign investors’ rights in the United States even if there are these transactions that are fake?
03:24 Nancy Curtin
So Walter Wriston once said, “Capital flows to popular places and keeps good treatment.” So I put it there as a small piece. However, for the past two decades, foreigners have been allocating large numbers of foreigners to the states. Why? This is rational. Almost every asset class in the United States performs well, and the U.S. dollar outperforms that. So today they have a very, very large allocation, about $300 trillion. Foreigners have been assigned to the United States. Many of them are not solved. Therefore, we believe that in the room, foreigners will all all their securities will be allocated less than they will sell. We are still the most mobile market in the world. We still have great companies and the rest. But on the edge, if they allocate slightly lower or hedge their contacts, our belief is that we see a dollar more than we see, or the cost of capital. We must fund a deficit of $2 trillion. We have $8 trillion in flip risk. Well, now we may have some foreigners appearing in auctions. So what is this. This is one of the reasons why we have insufficient duration and therefore insufficient government bonds.
05:07 Speaker a
Let me ask you, as you mentioned the slowdown in the U.S. economy, what is the growth in corporate profits this year?
05:16 Nancy Curtin
Did you know, I actually think that company profit growth will be more resilient than people think.
05:22 Speaker a
Why do you say that?
05:23 Nancy Curtin
Well, look, this year starts at the age of 12. OK? We might end up with six or seven, something like that. So it will slow down, but look at the first quarter. You know, we were 90% in the first quarter. Well, profit growth was 13.4, and expectation was seven. Uh, you know, there are 10, 11 departments in the positive territory, with the edge hanging there. Now, you can say, well, this is behind, because it all happened before April 2. Uh, but it is widely believed that there are many shock absorbers in the United States. It has a good wealth effect. Well, you know, mid-range consumers make up 88% of consumer spending. Tariffs reach low-end consumers. They are regression tax. We already know. Well, we already have tax bills, in Congress. We think this is encouraging. There are a lot of good stuff out there. By the way, we have record buybacks and lower dollars means better revenue. So let's just think about some of these things. Therefore, our view is not that they do not slow down against early expectations, but that they may be more resilient than one might think.
