This has been a runaway trade, the momentum trade. What could stop it? So, you know, you mentioned it's a it's a momentum trade. So to be able to figure out exactly what will stop it, it's basically impossible. But we think that there's a couple of things to keep in mind. The interest rates right now, we did get that flight to quality last week, so yields went down, markets like that. But then take a look at what's happening today. Yields are backing up. That can take some of this momentum out of this rally because what's going to happen is people will just start looking at valuations. And with the uncertainty around where interest rates are going, we obviously know that eventually the Fed will cut rates. We just don't know when. And when you're looking at long-term yields, when you're looking at the Treasury market, the dynamics in the Treasury market are just for higher

yields because we have so much issuance
that's out there. And this is something we think could
take some wind out of this sale here. It's just that can be a value valuation
correction. Really interesting that you're looking
at what's happening in terms of supply side with treasuries.
Well, what about the inflation picture? What have you been taking from the PPE,
the CPI, and whether or not we are cooling or whether actually we're still
just too high for too long? It is calling the data we got last week
was good, was good news. But let's keep in mind it was one
month's data and we still are far way away from where the Fed wants to be.
And when you actually dig into some of those reports, this is a good deflation
story. This isn't a service deflation story.
In fact, we're still looking at service prices that are quite sticky.
And housing as well is another thing

that's sticky.
These are things that the Fed is going to be taking into consideration.
And this is why we think, and we kind of lean in the camp higher for a little bit
longer. We might get something in December, but
we need a lot more information before we can say that the Fed can do that and
just add in, as you say, that flight to quality, that volatility that we see
because of political risk over in France, of all places.
I mean, how much making do you have to take in the global geopolitical risks
right now? Yeah, I think it's something we have to
consider when you're coming into this year.
We knew we had a lot of elections and political risks globally.
And let's keep in mind, we haven't gotten to November.
We are in here in the U.S. So there's a lot from a political
standpoint through this summer that can keep the markets on edge.
And it just tends to be when there's so

much risk out there.
But there's so the markets are so high, you know, what's the upside risk from
here? That's what I don't see.
I see a lot more downside risks from here than I do upside catalysts.
So what to do as a chief investment officer of Capital Advisors, I mean,
where do you see is it protecting your downside or is it so is it hedging or is
it more sort of reallocating in some way?
So at this point, there's, you know, a whole cache, keep a good amount of dry
powder that you can take advantage of opportunities.
That's what we've been doing. Cash isn't hurting you right now.
You're getting 5% or more. Eventually, that won't be the case.
But for now, you have the cash to be able to look for opportunities and there
will be opportunities. Right now, if you look at the market,
parts of the market that are really

unloved.
Look at small and mid-cap stocks. Now the economy starts to roll over.
They're going to struggle a bit, but that's the time to take advantage
because that's where you see the best upside as we get out of this, you know,
an economic slowdown and they're priced. So on a relative basis versus large cap,
the cheapest we've ever seen. When you're thinking of a technology
show such as ours and many want to understand the realities, you need to be
diversified, but they also want to understand where the opportunities are
outside of MAG seven in technology, like is there a play for tech or indeed AI in
small and medium sized companies? So, you know, the guy is is here with
us. It's been here, but it's just only going
to evolve going forward. The one thing when you think about A.I.
is it's not just technology, and I know it's a technology show, so I apologize.
But let's look at other areas of the

market that will benefit from A.I..
So what are the companies and sectors that are going to benefit from
implementing A.I. that that we can see that in their
earnings? Those are some of the things we're
looking at. Industrials, this is an idea, you know,
some consumer stocks, I think it's right now a little bit cautious because the
economy is weakened and consumers are definitely stretched.
But think of where the companies that are going to benefit from the use of AI
going forward. What about energy?
I mean, that's a great story. Very well read all about the focus of
Bill Gates at the moment, perhaps on nuclear energy.
And I'm wondering whether you're seeing energy and some of the infrastructure
needed for this new paradigm shift as a place to bet.
Yeah, absolutely. That is an area we look at what
utilities have been doing as well because of the use for it.
But the infrastructure side, we don't

have yet to be able to support what this
is going to look like in the next decade.
So we do need from an infrastructure standpoint. That's those are some areas
that we'll look at, as well as we see some broader weakness in this market.

Verdence's Horneman: Cash Isn't Hurting Right Now

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