So we've had a conversation about what's happened this quarter what's going to be coming up around the corner here. But let's
look down the road here. Let me start with you. Where is there cause for hope. We got a lot of concerns about inflation about
the tightening we're expecting in response. And by the way we still have a war going on where people are dying every day over
in Ukraine. But what are some of the possible upsides for investors down the road.
Make it perhaps not too far down the road and I hinted that before the break ah the pandemic recovery stocks they were
certainly hit very hard in 2020 and had a false dawn in early 2021. And then on the corn variant grip them again and drag them
lower. They rallied a bit and they were doing very well from January of this year until February. Twenty third particularly
the ones in Europe. And then we had this as you noted this horrendous invasion so that it
really hit these stocks hard. Some of the great airline companies like one of the best discounters in the world Ryanair
crushed. And these are opportunities for investors because we can't assume that invasions last forever and this pandemic is
thankfully dissipating. So there are other ones that aerospace travel and leisure. You can find airport companies and aircraft
engine manufacturers have only one or two competitors like it. So
this is where active management gets very excited as you can tell. There are pandemic recovery stocks out there there in food
catering and retail. They just need they need the mass to be off to people be out again.
And then. And as we discussed before not too great of a inflation headwind cutting into their discretionary spend. So
let's add in addition to possibly the pandemic Covid you may agree with exactly what we just heard from Sarah. But there's
one other factor I wonder about. That's fiscal stimulus right now. We have essentially a D stimulus because we're coming off
of so much fiscal stimulus as it's the same time that horrendous war in Ukraine that goodness knows we want to be over soon at
some point will be over and they'll have to the need to invest a fair amount of that the potential fiscal stays at least in
Europe. Yeah I think the the investment story longer term not just driven by the terrible tragedy going on in Europe right now
although that clearly will stimulate some investment whether it's energy infrastructure food infrastructure
not to mention the rebuilding of actual infrastructure in Ukraine. But even prior to that I think what the pandemic
brought about was the necessity of investments in certain areas. And there was so much low hanging fruit of inefficiency in quite
a few segments of our economy health care education. And I think the necessity of sort of stepping up and becoming more efficient
and investing in digital driven by the temp pandemic. I don't think kind of goes back under the rock. I think we have
unleashed what is likely to be an era of stepped up investment and probably along with it higher productivity. It doesn't
prevent a possible recession in the near term but that's where I think there is sort of a shining light when you think longer
term about what may come out of the combination of both the pandemic and the war.
It may even be medium term to the degree that the digital spend is so necessary. They will take precedent even when other if
there's some sort of curtailment of capital expenditures. Companies have to make that transition and they need to do so
globally. So we think of that as somewhat non cyclical part of the whole technology spend.
And I don't think I know many people who are rooting for a recession although as you suggest a lot of people have to be
prepared for the possibility of it. But is there a potential if I can say that upside potential to some creative destruction. I
think that's what you were talking about. Whenever you have a lot of money sloshing around some bad decisions it made. If it
takes some of the liquidity away then actually people have to make some tough decisions. And maybe you should sort out maybe
the sheep from the goats. Yeah I think there have been some maybe unintended consequences of this massive amount of
liquidity whether it's a mispricing in various markets and asset bubbles. So I think there's a benefit that will accrue there.
And then as we already touched on the unfortunate possible necessity of constraining aggregate demand in order to rein in
the combination of the supply chain problems and and just that the feeder effect it's having on on pricing and inflation we may
need a recession to calm all of those forces and it may not have to be a particularly deep one. But I do think what we're looking
at is a more kind of normal cycle. If we're heading into recession what it looks like it causes of it being tighter
monetary policy that sort of traditional the last cycle the Covid recession the aftermath of it there was no playbook for
that. That was incredibly unique. I think this next cycle both into the next recession and coming out will be a little more I
want to say garden variety a little more in keeping with your typical recession recovery type cycle. So Sara give us just a
little taste of your secret sauce here. As an investor as somebody who maintains a portfolio as you take a look you've
talked about things like coming back from pandemic. That's sort of a structural thing across the board as you try to figure out
which companies really are being run well and efficiently or making sensible decision. What do you look at and what are what
others Covid is giving an example or is it just to take up what Liz and just mentioned the degree we've got to look at to see a
typical recovery or typical recession recovery then let's find those stocks that tend to do well in that environment. So what
doesn't do. Well initially as you head into the bottom of the economy and I'm speaking really for everything. Ex China and the
rest of the road is largely on the same monetary policy cycle meaning tightening other than China and
banks other financials they tend to bottom somewhere as as we get into that significant amount of tightening and the recession
takes hold. And then they rally very strongly. May remember the early part of 2009. Unbelievable performance. So if if
history is going to repeat itself what was answers is correct which I agree with. This is a little more normal a little more
than than those are good stocks to own. And the most bombed out ones are in that part of the world that's really been hit hard
which is Europe. So European financials and you could also go with the energy transition. One of the silver linings of this
horrendous energy disruption is the greater need to accelerate then move to low and then zero carbon type renewable energy. And
some of the European utilities are expert at this and they're trading at for 6 percent dividend yields.