ROMAINE: YOUR CLIENTS HAVE TO BE ASKING
A LOT ABOUT ECONOMIC CONDITIONS. IDA:
EVERY INVESTOR IS ASKING HOW SHOULD I INVEST?
EVERY INVESTOR NEEDS A HEALTH CHECK AT THE MOMENT OF THEIR
PORTFOLIOS. LAST YEAR, GLOBAL MARKETS WERE
HIT, EQUITIES DOWN 20%, FIXED INCOME FOLLOWING, SO MANY RATE
HIKES, AND INFLATIONARY SITUATION.
PIVOTING INTO THIS YEAR, I THINK IT'S GOING TO LOOK VERY DIFFERENT
SO WE'RE ADVISING OUR CLIENTS TO START MAKING SOME SHIFTS
WE THINK WE WILL REACH PEAK INTEREST RATES IN THIS NEXT
HIKING CYCLE TOMORROW. WE ARE SEEING THE INFLATION
NUMBERS COMING DOWN STEADILY. CHINA IS OPENED WITH EARLY
GROWTH OUT OF THAT REGION AS WELL. ROMAINE: THE FED DOES MAKE
THAT BIG MONETARY POLICY DECISION TOMORROW.
THE EXPECTATION IS ANOTHER RATE HIKE BUT MOST FOLKS HAVE PRICED
OUT THE POSSIBILITY OF ADDITIONAL HIKES AND ARE
PRICING IN RATE CUTS. DO YOU THINK WE REACHED THAT
PEAK? WILL WE SEE SOME STABILITY?
IDA: WE BELIEVE TOMORROW'S HIKE AT LIKELY
25 BASIS POINTS WILL LIKELY BE ONE OF THE LAST. WE WILL SEE THE RATES
QUITE FLATISH AND THEN WE MAY START TO SEE SOME CUTTING AS UNEMPLOYMENT NUMBERS
FLOW THROUGH. YOU ARE SEEING LAYOFFS HAPPENING AT
THIS VERY MOMENT AND AS WE SEE PRESSURE ON CORPORATE EARNINGS FLOW
THROUGH, YOU MAY SEE THEM TAKE DOWN RATES FOR THE END OF THIS
YEAR.
ARE YOU ANTICIPATING A RECESSION?
LIKELY IN THE NEXT QUARTER OR TWO. WE NEVER REACHED BARE MARKET
BOTTOMS UNTIL MIDPOINTS IN RECESSIONS.
WE HAVE TO BUCKLE DOWN FOR NEAR-TERM VOLATILITY THAT WILL
HAVE ON THE EQUITY SIDE BUT MAKE SURE YOU'RE NOT WAITING
TOO LONG. THAT WILL POTENTIALLY HAPPEN
FROM THE END OF THIS YEAR. ROMAINE:
I AM CURIOUS ABOUT CLIENT FLOWS WHERE THE MONEY GOES
AND WHERE IT'S ALLOCATED.
THE BIG STORY HAS BEEN MONEY MARKETS, BUT A LOT OF PEOPLE
HAVE BEEN EMBRACING CASH FOR SOME TIME.
FIXED INCOME BECAME POPULAR BECAUSE OF THE HIGHER RATES
AND THE RETURNS THAT YOU'RE GOING TO GET THERE AND OF COURSE, THIS LONG
STRUCTURAL SHIFT EMBRACING PRIVATE MARKETS. IDA:
WE SAW A LOT OF SHIFT FROM CASH POSITIONS INTO FIXED INCOME, PARTICULARLY
MUNICIPAL BONDS LIKE TREASURIES WHERE YOU CAN GET A DECENT
YIELD. THE LOT OF SHIFT FROM CASH INTO
FIXED INCOME -- A LOT OF SHIFT FROM CASH INTO FIXED INCOME.
ROMAINE: WOULD THAT SHIFT GO INTO FIXED INCOME
SOMETHING TO TIDE ME OVER? IDA: A BIT OF BOTH.
SOME OF THE DISCONNECTS AND THE ABILITY TO GET 7%-8% IS ATTRACTIVE
FOR LONG-TERM INVESTORS. WHEN YOU LOOK AT A SIX MONTH TREASURY
YIELDING 5%, THAT'S PRETTY ATTRACTIVE FOR A SHORTER DURATION AS WELL.
IT IS BOTH, BUT ON THE EQUITY SIDE, WE HAVE BEEN PIVOTING
INTO HIGH-QUALITY, DIVIDEND PAYING STOCKS.
THREE TRENDS WE LIKE, HEALTH CARE IS ONE, DIGITIZATION, DEEP TECH
AS WELL AS AND CLEAN ENERGY. ROMAINE:
HEALTH CARE MAKE SENSE TO ME.
THE SAME TIME WE SEE DIGITIZATION IS ARTIFICIAL
INTELLIGENCE A COMPONENT OF THAT? IDA: YES.
WE ARE TALKING ARTIFICIAL INTELLIGENCE, OR CYBER SECURITY.
SPENDING INTO THE INDUSTRY OF CYBER SECURITY WILL ONLY
INCREASE OVER TIME. ROMAINE: WHAT ARE THE INVESTMENT
OPPORTUNITIES THERE?
JUST WITH -- BEHEMOTHS LIKE MICROSOFT OR ALPHABET
OR IS IT MORE DIRECTLY INTO SMALLER COMPANIES?
THAT ARE REALLY BUILDING THIS UP. IDA:
WE DO IT IN A COUPLE OF WAYS INCLUDING PRIVATE EQUITIES, AND DIRECT INVESTING.
WE PROVIDE OPTIONS EXPLORE WITH OUR CLIENTS. ROMAINE:
THE PRIVATE BANK AT CITI HAS GROWN. WHAT IS THE GROWTH STORY?
WHERE ARE YOU TRYING TO EXPAND? IDA:
WE VIEW THE PRIVATE BANK AND WEALTH IS ONE OF THE FIVE
INTERCONNECTED BUSINESSES HERE AT CITI.
WE AIM TO PROVIDE SERVICES FOR CLIENTS, AND THEIR FAMILIES AND
THEIR COMPANIES. LEVERAGING THE EXTRAORDINARY
PLATFORM WE HAVE AT CITI. ON THE WEALTH MANAGEMENT SIDE, HELPING
OUR CLIENTS WITH GLOBAL WEALTH MANAGEMENT AND INVESTMENT NEEDS,
BALANCE SHEET MANAGEMENT, WEALTH PLANNING AND PHILANTHROPIC
ENDEAVORS TOO. OTHER COMPANIES INTO OUR
INVESTMENT BANK TO HELP THEIR COMPANIES AROUND THE WORLD
CHOOSE FULLY COMPREHENSIVE AND FULLY GLOBAL SOLUTIONS. ROMAINE:
ARE THERE CERTAIN GEOGRAPHIES THAT MAYBE OFFER MORE GROWTH?
IDA: WE HAVE ALWAYS BEEN FOCUSED ON
GROWTH OPPORTUNITIES AROUND THE WORLD.
WE SEE OPPORTUNITIES IN THE ASIA-PACIFIC REGION.
WE ARE SEEING THAT WITH THE REOPENING OF CHINA.
WE'RE SEEING THE FIRST QUARTER GDP NUMBERS COMING IN STRONGER
THAN ESTIMATES.
WE ARE SEEING THAT CONSUMPTION REMAINED STRONG AMONGST THE
MIDDLE-CLASS AND WE ARE SEEING STILL THE AMOUNT OF INNOVATION
IN TECHNOLOGY AND ROBOTICS AI AND CLEAN ENERGY. ROMAINE:
AND YOU'RE STILL SEEING A LOT OF THAT CROSSFLOW WHEN IT COMES
TO INVESTMENTS, CONCERN WHEN IT COMES TO GEOPOLITICS, BUT YOU
ARE STILL SEEING THOSE FLOWS CROSS BORDERS. IDA:
WE ARE SEEING INCREASED URGENCY TO DIVERSIFY GEOGRAPHICALLY,
ESPECIALLY WITH THE U.S. AND CHINA.
A LOT OF COUNTRIES WILL BENEFIT FROM THAT, INCLUDING SOUTH EAST
ASIA, FROM NEW TRADING PATTERNS