Finding Opportunities Amid Uncertainty & Planning for the Long Term

0:00Now let's speak more broadly about some of this action that we're seeing in the markets in the wake of the events this weekend to help me do that. Let's welcome in Rick Gardner Chief Investment Officer at RGA Investments. Rick great to have you with us this morning. I was just speaking to Nicole about the mood on the icy floor and as she mentioned, we're coming off of the worst levels that we saw so far in the session but still overall a down day. I would love to just start with your thoughts on the market reaction we're seeing to the events of this weekend. Yeah, I think the market is responding right now pretty patiently I think with all the events that have happened over the over the weekend. There was that short-term sell off as we started the day but the market seems to be taking this somewhat in stride as we seem to be coming off those lows and I think you look back over the last year and a half and that's kind of been the best behavior that an investor can take right now. You don't want to over-react to these near-term volatility events because you made find

1:04yourself on the wrong side of a trade. And in any of these events, whether they're the volatility events or earnings reactions in pretty much all of these pullbacks, we've seen them get bought relatively quickly, pretty much across the board here, do you see anything that's fundamentally different about this market cycle versus a dip buying that we've seen before because it feels very aggressive from my viewpoint. Yeah, that's a great point and I think what we're seeing is we've got near-term volatility that ultimately leads to long-term clarity. If you look back over the last six weeks, we had a change of leadership in Venezuela that had a big impact on control of that Venezuelan oil. We had a Supreme Court decision that gave us clarity about how this administration and their use of tariffs through IEPO was really not appropriate, but it also laid out the steps

2:05or the ways that they could use tariffs to further their agenda. And then now with Iran, it's been pretty evident that a regime change was something they were looking for and they've started that process and so that could lead to really more of a definite picture as far as what we're seeing in Iran. So I think across the board, the market starts to look at these things and say, you know, if we could just be a little patient right now, that clarity that we've been seeing with these other big moves that have caused volatility could provide some really good insight and we see that quick buying back of the market like we've seen in the past. Can't guarantee that's going to happen. This is a very fluid situation right now, but I think that's why the market and these pullbacks seem to buy up pretty quickly. So even investors want to participate in this by environment, assuming it continues through 26, what's the smartest way to play that because some of them have been quite

3:06swift? Sure. I think you want as an investor right now, it's very important to stick with your themes. So as you came into the year and the way we looked at it, military and defense was a theme that we liked. We also liked the AI infrastructure build out and you also have energy has been one of the leading sectors and you also have the value play. So the short term events, I think if you stick to your themes, they do provide those buying opportunities and if you've got the stomach to take advantage of them, there's a pretty good opportunity that is possible, but again, nothing is guaranteed. What's happening in Iran right now, if this were to become a protracted situation and could cause bigger price changes with oil pushing the price higher, that could hurt the consumer a little bit and so all bets could be off. But I do think as an investor, these could provide really good opportunities.

4:12And another place opportunity is presenting itself here and I saw it in the notes that you sent over before the events of the weekend, international stocks continuing to outperform US equities here. What do you think is driving that rotation into international and also do the events of this weekend change your outlook at all for the international stocks? No, they really don't. I think what we're looking at right now with the international markets is really for about 15 years, they have underperformed the US markets. My personal feeling, I don't think we're going to see the US markets or the US economy have a big downturn, but I think as our equities have become extremely accurately valued, I'll say, and maybe price for perfection right now. Those international markets have underperformed for a long time and they provide I think a good opportunity that could lead to good returns going forward.

5:13So the world is changing right now and I think it's giving those international names an opportunity to have some success, but only time will tell, we'll have to see where things go. Yeah, a lot of uncertainty in this market and needing that time for us to see how that's going to shake out, but Rick, we appreciate you joining us this morning for that insight there Rick Gardner Chief Investment Officer at RGA Investments.