Give us your take on. Can we get rid of this inflation story from the back of our minds right now in terms of risk. Or do you
still see that as the number one problem for markets. A great question clearly it's on everyone's lips right now where
inflation goes. I think the market is moving a little bit from of course inflation fears that will be in the background because
we are in a period for higher for longer. But growth fears and what does that mean. Yes the Fed's on a track where they're
gonna do we think 50 in the next two meetings. Very hard for us to see that we change unless something really broke in financial
markets. But if you look at longer term inflation expectations eventually come down from about two point seven percent a two
point three percent in say five years time period medium term. And that's a reflection at least the Fed has talked up the
pricing in the market. So for example people expecting buy in the euro at two point seventy five percent Fed funds rate. So
that's tightening is starting to happen in financial conditions. That's key.
Has it been priced fully though. I mean we've been talking about the. I mean yeah well let's first acknowledge that they thought
inflation was transitory than markets had to catch up. They had to catch up. Do you think we priced that in right now.
We do we were underweight government bonds for a long period of time and only about a month ago went to neutral from underweight
so we're not overweight. Well we do think we are starting to price in a fair amount. Fed rate hikes.
The thing is you know this is all coming at a time also that we're seeing a sort of move away from the consumers buying goods
to them actually using services. What are the implications of that on inflation in your view.
Yeah that is the next phase. We think some signs of goods inflation coming down is happening. Use car pricing is finally
coming down used to be able to car buy a car in the US come off the line and sell it for a higher price and just bought it. And
also you're starting to see demand destruction for example the Wal-Mart targets. Inventory levels are now going up but
obviously spending is switching his services. We look at the recent CPI figures that's airfares. It's hotel rates obviously
which are driving this. And of course we're also looking for tonight's non-farm payroll average hourly earnings. When does
that peak. OK so this brings us nicely just to talk a little bit about some
of the themes that investors should be looking at. I mean we've really been touching on this during the program. We're looking
at energy security food security getting more and more prominent in various countries in this part of the world. Then technology
security given the supply chain disruptions here as well. How do you actually look at that as an investment opportunity. Those
three things. These are megatrends is a long term thing so some of them relate
to moving your supply chain which takes 1 3 5 years in some cases but that resiliency which people are asking for is
definitely happening. So for food security it's fertilizer it's improving crop yields it's agricultural chemicals area spaces
that could benefit for other types of security. Cybersecurity is a big benefit there as well in terms of the online space and the
Internet space which is only going to grow with the geopolitical and regionalization we see over time. Energy is front and center
as we know. We are seeing a shift obviously in European policy. That's a shift over many decades which happened in just one
weekend. So it's not going to happen overnight. But Germany for example building up LNG in the next two years is going to be a
huge investment in infrastructure and construction particularly within Europe for this ship. Obviously on energy security. So
there's some areas you can benefit as well both on the cyclical side as well as the technology side.
Talk to us Prashad about this call and high dividend stocks right now. Obviously price has directed somewhat that you still
like obviously dividend plays. And just help us understand why you like them now and what would make you change your mind once
we start to get the price come off from the bottom. Yeah this has been a good place to hide out with the market
volatility. We think we're moving from a teen market where there was no end to a Tara market where there are reasonable
alternatives. So it's not like dividend yielding stocks high dividend because high margins. So if you have a profit issue
you're going to have pricing power give higher marks your lower margin Covid you don't have pricing power. So the key is a
dividend sustainability inhibiting growth. But within fixed income you think about the two year three year part of the
Treasury curve you add a credit spread on top of that for high quality investment grade bonds and we have a slowdown not a
recession. That means you can clip 3 4 5 percent yields now for the first time in a long time. So yes dividend yielding stocks
dividend growth with sustainability some level of shorter term bond yields for the first time in a while look attractive. So
those are defensive areas of the market. I would also highlight health care another defensive sector it's outperformed the S&P
15 percent year to date has pricing power. It underperformed lost it. And of course it pays good dividend yields and healthy
free cash flow.