Long-Term Opportunities Within Market Pullback

0:00Welcome back to opening bells time for the very latest here on the floor joining me right now and Maletti head of equity investments at all spring global investments and we were just talking about how look the feel here is the obvious and that you have the down in the S&P down four weeks in a row you have the down at the lowest point in a year and while some people may be looking for opportunities I know in video just got a best ideas list this morning maybe people are worried I don't know what are you thinking I do think investors are worried and it's more that there are more unknowns today than there were at the start of the year and those unknowns have brought some volatility into the market and volatility doesn't necessarily feel good but as a long-term investor it can bring opportunity so when you think about these kinds of pullbacks and we have a war going on and you do just go for the names that you always liked or are you looking for things that are more or less economically sensitive you have the 10-year bond yields which is 4.3% are you changing what

1:04you're picking well I think it's a really interesting question because prior to the conflict in Iran what we saw is the market as we entered 2026 even late in 2025 started to change and started to rotate you started to see the dispersion really spread out in the market and so instead of it just being a select group of names that worked you started to see small cap work made cap work even emerging markets work and that was a differentiator and I think it does give a better opportunity for investors to diversify their portfolios in an environment like this where there is more risk and more uncertainty that diversification becomes even more important yeah and I know you want to talk about international emerging markets versus the US and how we should diversify a portfolio five most important things for investors to watch I would love to hear this list yes so clearly inflation is one of the biggest concerns today we heard from the Fed yesterday they're worried about it too the labor market their second part of their mandate both of those things are

2:07now you know a little bit more challenged for them that makes the the environment tough for investors like myself and our portfolio managers are worried and focused on earnings growth so what does earnings growth really look like it's expected to be about the same as last year 12 and a half 13% that's pretty optimistic hopefully we can get there AI CapEx spend is another area obviously we talked about that a lot before this conflict started is that sustainable and then finally private credit and the cracks we've seen there can that further in fact the financial markets and you know I it is one of those things have we seen the story before are we in the early stages of that and is that at least causing investors to think about going other places yeah we were we were seeing Apollo bouncing back the last couple of days today I mean I know we have more broad based selling so you know I would imagine has a down hour right now but it's interesting we heard from the Fed yesterday and most people came away with the dot lot of one cut this year one cut next year Goldman

3:09Sachs is going out Jan Hatsiest and saying two cuts this year while JP Morgan a short time ago I just saw no cuts yeah wow I mean that's gonna be at the end of this year you know who's gonna be right was it Goldman Sachs with JP Morgan in the no cuts two cuts or is it just gonna be the one cut you know in the meantime let's talk about what you are buying internationally where you think there's opportunity well again as you looked in in 25 and early into 2026 one of the places or a couple of the places we saw investors really under allocate it was that international and emerging market space and we saw really great performance out of emerging markets last year so started to attract a little bit more interest 2025 you could say that interest was fueled by a week dollar but if you looked at fundamentals you did see really strong earnings growth coming out of these countries in some cases better than domestic earnings growth and so that is an area that we still like I think if

4:12you're if you're looking one month out or maybe a quarter out it's gonna be a little bit more difficult given that this conflict's going on but this could be a great buying opportunity for those people that have not diversified outside of the U.S. I would still say U.S. is the best place probably to be but putting 5-10 percent of your portfolio outside the U.S. certainly makes it a lot of sense okay so that's you know a portion 5-10 percent what about you mentioned small caps mid caps tell me about that yeah well look again they they started to rally late last year somewhat dependent on the fact that we believed we were going to get two to three rate cuts in 2026 but if you looked at the underline fundamentals what you also saw as earnings growth really start to accelerate and we have seen that play out it within the first quarter of the year I think there's some nervousness now if you believe rates are not going to go down at all that's not you're not going to get the tailwind for small cap but I still think there's a lot of great small cap cap companies that have been left at the

5:16wayside and the multiples and the difference in multiples between large and small are still pretty dramatic and there's a lot of opportunity in that space I know you can't name specific names per se but we I did want to say new street actually said in video was the best ideas list today sees the stock doubling we got some good news on sales for Apple and sales in China I had a guest on earlier who picked Microsoft so there still seems to be appetite for those max seven names that have come off the highs and some of them even being regarded as value place what do you tell folks when they ask you about the max seven names well I think you know I'll broaden it out a little bit more than that if you look at those larger names primarily the tech names tied to AI we believe this innovation cycle is very real and we're in the early stages of that so we're not telling investors to completely separate from that area of the market but when you think about the concentration in an index like the wasa one thousand and you have more than 50% of the names you know in 10

6:16names more than 50% of the allocation that's too much concentration you want some track and that's right what about energy I think again energy was very under allocated and most investors portfolio right was this belief that we had a supply glut and you can see on a dime how quickly things can change and so again you know whether it's market weight or whatever there's there's some benefit to you having commodity exposure overall it is going to fuel the backbone of AI yeah and we're you know we're seeing some news on the banks right now of course right I'm gonna pull up the XLF for example which has been on a downtrend the 10-year bond yield of four three I don't know where you think bond yields could be headed but we're also seeing some new regulations for banks and how much capital they need to hold and reserves and I think they've always continued to update those since the financial crisis but your thoughts on financials overall I mean overall it's been an area that we liked coming

7:19into the year there's a little bit more you know again because of the rate environment it may not have as many tailwinds behind it but I think the regulatory environment has been pretty favorable for banks and if we you know beginning we talked a little bit about the risks in private credit if you have money flowing out of that area because people want liquid names some of the banks have taken that risk off their balance sheet and so they don't have as much risk as they've had in the past that risk sits in other areas like private credit I wanted to clarify what I was saying about the regulators and how it's some of the things because it's just breaking now yeah and so I thought US regulators unveil plans to ease capital rules for big banks the fact to propose revised GSIB surcharge that lowers biggest bank capital by 3.8% that says revised Basel 3 proposal would increase large bank capital by 1.4% so I did want to get that in there because I did bring up the you know the

8:20financials on purpose because I saw some headlines crossing so I wanted to get those in there I mean they were always sort of your parents favorite the go to but in a lower rate environment theoretically they do better than in a higher rate right exactly exactly and letty thank you so much of all spring global investments thank you very much great to see you in person