Laura I'm gonna go to you because you are exquisite. It's something no one talks about anymore. Not the Red Sox middle
relief but small cap stocks. And the answer is small cap stocks do nothing. And then about every nine years boom. Are we close
to the small cap boom and why small caps are in a holding pattern right now versus large cap. I think they're waiting for
their moment. Like what seven years. Well they actually have had a terrible last year and a half. And actually they've been bad
for quite some time. But I think really round 2014 was kind of the last moment in the sun that we had there. But look I think
small caps are telling you that this is a market that wants to start bottom fishing where people are starting to look for
things that have been depressed. And when I talk to investors about areas of the market right then they risk small cap is the
number one thing that looks like a small cap because they're zombie companies or because their managements do not merge into
mid-cap size. What's the what's the pixie dust of why they underperform. There's a few different. There's a few different
versions of it. There are the younger growth companies. They're still up and coming. There's some that have been older and
fallen on harder times. And then there are others that are simply a little too niche and haven't gotten scooped up yet. So
there's a big variety in there. David a lot of this hinges on inflation getting back to 2 percent as so many people believe.
And this is the distinction people are drawing from the terrible 70s saying this is different and it is less entrenched than some
people fear. What is the risk that that's not the case or is it a screamingly obvious argument that the Fed will get things back
to where they want it. The Fed will do everything it can do but it may have a bitter medicine for it for the economy. So I do
think it's instructive to look at the 1970s and try not to repeat those mistakes. It's early in the 20 20 years
from 1975 to 1979 real GDP growth was 5 percent plus. So real growth is not going to be that strong in the United States. It's
really important that inflation does work its way back to the Fed's target of close to 2 percent. That's going to require the
Fed doing its job. Fiscal discipline and most importantly a renaissance once again like in the early 1980s of the supply
side Reaganomics combined with focus monetary medicine is what laid the seed for a very good 80s and 90s and thereafter. So we
need to learn the lessons of the 70s and not repeat the mistakes. Meanwhile as people do bottom fish and Laurie says
there's evidence from the small caps. How much are bonds participating in this. Has the stability in longer duration
bonds provided a template for that bottom fishing for that comfort that could even persist longer than people think. I
think investors are better off for now in short duration bonds treasury bills to three year treasuries. The bond market is not
priced for the Fed getting to as high as 4 percent and neither is the equity market. That would be a risk. So I
think investors should be careful with the bonds look for inflation protected bonds hold onto cash and then look for real
assets whether it be stocks or real estate or utilities. I do like I do like small caps and I do like banks for those who are
willing to take the cyclical risk. I think small caps have been beaten up even more so than the large caps. And what's
interesting about small caps. They were held back over the past decade or two from globalization other factors. They would
benefit. So we're going to primarily disagree with each other very well here. I think there right by where I am. That's why
we're put on the couch together. I do wonder though when you we're all talking about the United States. We have to zoom out.
It is not about the United States right now. It is strong in the United States in Europe. It's another story with gas. And we are
looking to the ECB next week. We are looking to the Nord Stream one pipeline whether it will come back online. We are looking to
emerging markets. Tom has been talking about it all week and some of the crises percolating in pockets throughout the entire
complex. At what point can the United States fall subject to what's happening outside in the rest of the world. Laurie. Well
look I think we had a template for this back in 2018. We spent most of the year thinking the U.S. would be immune from the
global recession that would emerge from the trade war and then recession fears came home to roost and markets fell sharply. But
we've already done that at this point in time. So I think we can go back to this idea of a relative game. Will Europe be worse
off than the US if the U.S. is better off. I think there's a limit to the amount of cash that institutional investors in
particular are willing to sit on. So a lot of that money is going to find its way into the U.S. and the small caps. David I
want to go to the heritage of TWX and of course the relationship with Deutsche Bank and the giant David Focus and who on February
24th or 25th told me watch the dollar. This will need to be amended. We are now living a dollar surge. And I'd say this week
folks. That's why the blended large large nation index was caught up with late in the week by the Bloomberg Dollar Index.
David how do our listeners how do they adapt to a incredibly large strong dollar. It's a tough thing to adapt to. Don't
forget the S&P 500 not banks but the rest is a very global set of businesses and they're facing foreign exchange rates and
they're gonna be facing tougher competition in the areas of auto and machinery and tools from Japan credibly weak yen and Europe.
And it's a slow but slower global economy anyhow. David Focus Landale from Deutsche Bank was one of the first to warn of a
recession coming and I did abuse the asset management business. I believe there will be one late this year or early next. Laura
Lincoln your work with Tom personally right now he's truly expert on wage growth or the lack there of what is terrible real
wage growth mean for our listeners. Well look it reduces consumer spending power at the end of the day. There's a
weakness right to the undercurrent spending which is that we're going to see in the coming weeks. I think that you have seen a
few companies already allude to the idea that there have been some hits to demand. If you read some of the early reporters I
think that's something we have to watch out for. I think the country's a little bit of a shell shock at the moment with all
the recession talk. But I think that's really you know this idea sort of this undercurrent this underbelly of weakness that is
not captured in the headline data is something to watch out for with the data dependency of the central banks for the data
dependency of traders looking at some of these wow statistics that we were just talking about this week. David what are you
trained on to give you some guidance. Because we were talking about the University of Michigan controversies controversial
sentiment data and how much people are really trading off of that. What's your compass. My compass is actually not the
consumer. I think the real concerns are on the supply side something we've taken for granted for 40 plus years. So I'm
watching the global economy. I'm watching the conflict. I'm looking at policies both in the United States and Europe and
seeing if they're more pro supply side than they have been in recent couple of years. So I'm trying to get a big picture idea
because I want to step up and buy. We have a recession and equities get hurt perhaps a little bit more. But I want to be
more confident this is going to be a good decade. But I think we need some better policies. And if we look back and see the 20
20s turn out to be another great decade for stocks I think health care will be a big part of that.