LET'S BRING IN LAURIE, VICTORIA, AND KEVIN. GREAT TO SEE YOU GUYS. LAURIE, MARKET -- LOOK, WE COULD GO THROUGH MARCH AND MANY OF US DID, AND YOU DID, AND SAID, IT'S NOT GOING TO BE THIS EASY FOREVER. WE HAD NO 2% PULLBACKS SO, WE WERE KIND OF DUE FOR A SETBACK. BUT WHAT, SPECIFICALLY, DO YOU THINK THE MARKET'S CONTENDING WITH OBVIOUSLY, WE GOT THE GEOPOLITICAL HEADLINES T HIGHER FOR LONGER STORY, AND MAYBE A QUESTION ABOUT WHETHER THIS ECONOMY CAN HANDLE WHAT YIELDS ARE GIVING IT. >> IT'S A REALLY STRANGE TIME IN THE MARKET RIGHT NOW WE'VE BEEN OVERDUE FOR THIS PULLBACK I'VE BEEN WORRIED SINCE JANUARY. I THINK YOU HAVE A COMBINATION OF DERISKING I THINK YOU HAVE THE BEGRUDGING ACCEPTANCE OF A HOT ECONOMY CONTINUING TO BUILD. WE'RE SEEING SECULAR GROWTH THEMES GETTING SOLD PRETTY HARD. YOU DON'T NEED SECULAR GROWTH AS MUCH WHEN CYCLICAL GROWTH IS PICKING UP AND YOU KNOW, I THINK I SAW TODAY THE CONSENSUS GDP FORECAST IS UP TO 2.4%. THAT'S PRETTY DARN CLOSE TO AVERAGE. >> FOR THE FULL YEAR >> FOR THE FULL YEAR, AND IN A HOT ECONOMY, YOU TYPICALLY SEE VALUE AND SMALL CAP OUTPERFORM IT'S THE COOL ECONOMY WHERE THOSE THEMES TEND TO DOMINATE. >> WE HAVE THINGS LIKE BANKS UP TODAY, ENERGY UP TODAY, SO PART OF THAT CYCLICAL VALUE TRADE, PERHAPS. I GUESS THE QUESTION IS, IF EARNINGS ARE GOING TO HANG IN THERE, IN GENERAL, DO WE NEED ANY FURTHER SETBACK THAN WE HAVE HAD ALREADY? >> SO, TO ME, A GARDEN VARIETY PULLBACK IS 5 TO 10% THAT DRAWDOWN THAT WE HAD LAST FALL WHEN INTEREST RATES WERE SPIKING WAS ABOUT 10% ON THE NOSE SO, THERE COULD BE A LITTLE BIT MORE TO GO WE'VE GOT TO WATCH THE SENTIMENT INDICATORS PRETTY CLOSELY, AND THEY HAVE BEEN PRETTY FROTHY I THINK IT'S GOING TO TAKE A LITTLE BIT OF WORK TO REALLY GET THEM DOWN. I DON'T THINK YOU HAVE TO TURN TO AN UBER BEAR HERE AS LONG AS WE'VE GOT THE ECONOMIC TAILWINDS AT OUR BACK. THE REALITY IS IF YOU SEE A PULLBACK MORE THAN 10% AND KIND OF THE 15 TO 20% RANGE, THAT'S TYPICALLY ASSOCIATED WITH A GROWTH SCARE, AND I DON'T THINK WE'RE TALKING ABOUT THAT RIGHT NOW. EVEN IF IT GETS A LITTLE BIT WORSE, I WOULDN'T EXPECT IT TO GO TOO FAR BELOW, SAY, 4,700 OR SO >> VICTORIA, YOUR TAKE ON, YOU KNOW, WHETHER, IN FACT, THE MARKET IS TELLING YOU EITHER TO BE MORE DEFENSIVE OR IF IT SAYS, LOOK, LET'S GET USED TO AN ECONOMY THAT'S JUST RUNNING AT A HIGHER METABOLISM. >> YEAH, I THINK THERE'S A LITTLE BIT OF BOTH BUILT IN THERE. AS LAURIE MENTIONED, PULLING BACK THAT 47, 4,800 LEVEL GIVES US THAT 10% CORRECTION THAT 200-DAY MOVING AVERAGE FOR THE S&P. IT MAKES SENSE THAT WOULD KIND OF BE THE PLACE TO GO IN AND START ADDING, BUT YOU LOOK AT SOME OF THE THINGS WE'RE SEEING. YOU'VE ONLY GOT LESS THAN 30% OF THE S&P TRADING ABOVE ITS 50-DAY MOVING AVERAGE, RIGHT? PUT-CALL RATIO MOVING HIGHER YOU LOOK AT THE FLOWS OF ALL THESE FLOWS INTO SHORT S&P ETFs. THAT IS INCREASING I FEEL THERE'S VERY MUCH A DEFENSIVE MOOD AROUND THE MARKETS, AND SO PUT SOME DEFENSIVE INTO YOUR PORTFOLIO. SOME OF THOSE AREAS ARE DOING BETTER UTILITIES, WHICH TYPICALLY DON'T DO WELL IN A RISING RATE ENVIRONMENT, BUT WE'RE SEEING IT NOW. NAMES LIKE TELECOM, LOW BETA, GOOD CASH FLOW COMPANIES, I THINK, IS WHERE YOU NEED TO PARK SOME MONEY RIGHT NOW WE DO THINK, AS YOU KNOW, WE'VE BEEN TALKING ALL YEAR. WE DO THINK WE'RE GOING TO SEE PROBABLY ANOTHER 4 TO 5% PULLBACK HERE. >> THOSE THINGS THAT YOU DID MENTION, THOUGH, MONEY FLOWING INTO SHORT FUNDS AND PEOPLE HEDGING MORE, AND ESSENTIALLY SHOWING SOME CONCERN, ARE ALSO THE MAKINGS OF A BOUNCE, RIGHT >> THEY ARE. >> THAT'S WHAT WE HAVE TO WATCH FOR. >> YOU TYPICALLY HAVE THREE DIFFERENT ELEMENTS, RIGHT? WHEN YOU HAVE A COMPLETE TURNAROUND HERE. YOU HAVE THE INITIAL PULLBACK. THEN, YOU HAVE A BOUNCE. AND THEN, THE THIRD LEG OF THAT STOOL IS YOU GO BACK LOWER SO, MAYBE WE'RE GETTING A LITTLE BIT OF A BOUNCE HERE I THINK YOU WATCH DISCRETIONARY VERSUS STAPLES, WATCH THAT RATIO, SEE HOW THAT'S GOING TO DO IT'S CONSOLIDATING RIGHT NOW IF WE SEE THAT START TO PICK UP, THEN MAYBE THAT TELLS YOU YOU'RE IN THAT SECOND PHASE OF THE BOUNCE >> KEVIN, AS YOU LOOK AT COMPANIES AND HOW THEY'RE VALUED RIGHT NOW AND THEIR PROSPECTS, DO YOU FEEL LIKE YOU'RE GETTING MORE OPPORTUNITIES DO YOU FEEL LIKE THE COMPANIES ARE TELLING YOU THAT THE OUTLOOK IS GETTING BETTER, OR HOW ARE YOU NAVIGATING IT AS S&P IS DOWN 5%, THE MAJORITY OF STOCKS DOWN A LOT MORE >> I THINK IT DEPENDS A LOT, COMPANY BY COMPANY, WHICH IS HOW WE OPERATE WE'RE VERY BOTTOM-UP. BUT THE MARKET'S BEEN GRAPPLING WITH THIS, WHAT ARE RATES GOING TO DO, WHICH RELATES TO WHAT'S INFLATION GOING TO DO, AND WHAT WAS T, A FEW MONTHS AGO, I THINK CONSENSUS WAS WE WOULD HAVE SEVEN RATE CUTS THIS YEAR WE'RE DOWN TO -- I DON'T KNOW IF IT'S TWO NOW OR ZERO ALREADY >> TWO, MAYBE. >> BUT YOU KNOW, I THINK THE -- YOU KNOW, I'M NOT SURE WE'RE EXPECTING MUCH IN THE WAY OF RATE CUTS THIS YEAR. PROBABLY A HIGHER FOR LONGER ENVIRONMENT, WHICH MAKES THINGS LIKE PRICING POWER REALLY IMPORTANT. WE TEND TO GRAVITATE TOWARDS THOSE MORE STABLE CASH FLOW-GENERATING COMPANIES, WHETHER THEY'RE BRAND NAMES, WASTE COLLECTION NAME. WE'VE GOT SOME, YOU KNOW, NAMES YOU MIGHT CALL DEFENSIVE IN THERE, BUT
