Give us a sense of what you saw on the markets this week. As I say the equities did really well. Well despite the fact they had
a little a headwind from a couple of big tech companies. David thanks so much for having me. And you know earnings season
about 50 percent of the way through. And it has been it's been good. I mean not great like we saw in Q1 and Q2 but 85 percent
of the companies beating. So it's still above kind of average. But I'd say the one big caveat we would flag is around your
company guidance. And yet a lot of that has been focused around a lot of supply chain issues and other impacts that pricing
power initially. Yeah. For the companies that can do it should be able to work through. But that is something to continue to
look out for as we go into Q4. I think for companies that did missed they have gotten hit reasonably hard. And so while we've
seen the market react overall well to earnings on average 4 percent down for companies that aren't meeting expectations. And
so from our point of view you look at healthy spread between winners and losers is a really good opportunity for active
management and really excited to dig into some of the differentiation that we expect to see going forward. OK let's
talk about a check for a second because we had so many big tech earnings out this week. A lot of them positive. But then we had
the Amazon and Apple which really were a hiccup one of which was really supply chain and NIKKEI apple.
The other was really more labor NIKKEI. Amazon did it tell us anything in the longer term. Big tech driving this market which
it has done for so long. And now they they did disappoint. But I just take Apple for a second. People are disappointed but they
should remember iPhone sales were still up 46 percent year over year. So there still is good growth there. But expectations of
course were for fifty three percent. I think what you've seen there is very specific to what you just
said and maybe we can unpack it later which is supply chain issues and also labor. And we don't think that that's going to.
We think that's an issue that they can actually get over. Other interesting trends that we're focused on in tech earnings
generally would be I could maybe touch on payments as an example and what's happening in the finance space. I'm really interested
in the third quarter of this year as being kind of the first quarter that we've seen the potential for how much disruption we
think is coming at the financial sector. Just for context there are 16 trillion dollars of market capitalization in financials
compared to for example 14 trillion dollars of market capitalization in the Internet. And we are on the precipice of
seeing major disruption across that whole sector. We saw some big losers get printed in the third quarter. So the
merchant acquirer sector if you look at the earnings of those companies they disappointed a lot because they're getting
disintermediation by companies like Shopify or toast for example that are offering those services better product better pricing.
And then on the winning side and I'll add my comments there. But in terms of winners in this space you would look at by now pay
later which as my husband says to me isn't that just the same thing as a credit card. What's what's buy now. Pay later but
effectively what. It is great product for the millennial and Genesee consumer.
You basically pay on deferred payments. There's no late fee and there's actually no interest charged either. And the reason it
works is because they charge the merchants a higher fee. And those merchants tolerate that higher fee because they're getting
a bigger addressable market and higher volume. Now of course we need to go through our credit cycle to see if this is a durable
business model. But they're taking tremendous market share from traditional banks. OK apply your advocacy of active management
in this marketplace. Apply it to tech. How does that work. Where do you look for real opportunities in
tech. What do you tend to stay away from. Yeah I think when you're talking about tech too I think it's
important to focus on both public and private markets and you just way you're starting to see disruption. I think he often
will focus on some of the trends and the themes and the structural shifts that we're seeing. And I think that that's
where again active management and really being able to dig into some of the disruptors and the different ways that we're seeing
companies be able to change the way that we're operating. Often is being done. Yeah as much. I'm sure Katie will come back as
that in the private markets as much as you're seeing in the public market. So I would say from a tech perspective we do try
to focus on cross in everything from obesity early stage all the way through to the public markets. And yeah I think that the
thing that we talk about it's now like CAC isn't a sector. Like it's it's in every industry in every company. And so really
thinking through you know where some of the big shifts are going to be and where the investments happening. And that's where I
think that active management element of it and really understanding what management teams are doing and and getting it
right is so critical. So as an active manager Katie I would assume you go company by company but are there some categories
and let me specifically address one B2B versus B2C and tech. For example this week we saw SNAP really take a hit because of some
privacy changes made by Apple. Do you get a little nervous about possible regulatory problems in the B2C area.
It's OK. Oh sorry. Yes. The BBC area. Yeah I think. Yeah. Companies from regulatory perspective even changes that are
happening in lots of ways. Yeah. I think it is healthy for us to be challenging and thinking through some of the shifts that this
type of change related later operating its impact to you know how we live day to day. And so while you know there are
challenges that we expect these companies to to have to deal with. The fact is that the there are going to be around in the
profitability and the growth that we expect from them is going to be there. And you maybe you end up getting some more
competition that comes out of this and you get some of the less known mega tech companies. You get a bit more of an inroads as
you see a little bit more regulation and challenges coming through. Until we look at it as a healthy kind of programs that
are immune to having some of that come into that discussion. So OK you catch one of things that we've talked about a lot. What's
going on in Washington or not in Washington right now. But they have some sort of a framework whatever that means. And I think a
lot of corporates breathe a little bit of sigh of relief that the tax part of it didn't go farther than they thought it was
going to go. Right. Do you take into account the Specter future earnings projections. Yeah of course. I mean we we understand
that the tax burden which went down is going to shift back upwards to support all of the spending that we need to do some
of which is really important in this country to address systemic issues around income inequality et cetera. And we are able to
take that into the margins of companies. And while we expect to see some hit from that and also a hit from supply chain
resilience which we'll talk about later we still see tremendously strong demand and actually a path forward for
companies to continue to generate earnings. The one thing I want to comment about markets here is we've had the best October.
What was it you said for six years. Six years. So we got markets up 25 percent year to date. We've had a lot of strength out of
equity markets. And people always ask me what's going to be the catalysts like what would make things inflect. And I would
really point if we get a troubled earnings season because that's what supporting markets at these valuations. And so yes you know
being able to predict margins and what's the impact on that is really important. Okay prediction. Kate L. Hill let's go. Last
one to you. What about earnings going forward. We've had a really good run. What are you looking at in the fourth quarter
into 2022. Yeah we do expect a slowdown in the growth that we have been benefiting from but we're still constructive on the
cycle. We think a lot of the supply chain issues will continue into 22 but they're going to start to dissipate and maybe you'll
get a bit of a demand balance out from the consumer. But the consumer is still you know healthy companies are flush with cash
and we're seeing more indicators of companies actually investing. And from that perspective we feel good about where
earnings are. But it's certainly going to taper off from what we saw in kind of the four quarters coming out of the other crisis.
And you're starting to see that with this quarter. But we're still constructive going on next year and think companies will
be able to you know kind of survive through kind of any inflationary pressures. And we're still much in the transitory
camp. So we think that this will temper. But it's still going to be a positive place for equities and earnings are going to help
drive that.