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Calm in the markets · UBS Trending

• 0:03
  So, Kurt, we're
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  here in Central Park
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  for most New Yorkers
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  or people who visit here,
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  they know you come here to relax
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  and get away from the city.
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  The noise.
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  seems like the markets
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  are kind of doing the same thing.
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  They're breathing,
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  they're relaxing.
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  Maybe they're taking in a picnic
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  as well.
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  What's going on here?
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  Now, the markets have
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  have really come into a period of
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  exceptionally low volatility.
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  If you look at the measure
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  of equity volatility by the VIX
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  that's near the very low levels.
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  Rates
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  have kind of come into a range.
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  Credit spreads
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  seem like credit
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  spreads are very tight
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  We had to endure some
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  pretty rocky, stormy
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  seas in the spring
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  and early summer
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  with the announcement
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  of the Liberation Day tariffs
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  and a lot of other
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  political noise.
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  So, It's all
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  nice clear skies.
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  A great place to relax
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  and unwind here
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  in the summer months.
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  Yeah.
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  we had Producer Price Index
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  come in recently
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  at a rise of 9/10 of a percent,
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  which was a multi-year high.
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  What am I missing
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  that the markets are saying
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  this is okay right now?
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  Inflation's moving
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  in the wrong direction.
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  And the labor market
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  is not as strong as it once was.
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  And that is a problem for the fed
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  as they're setting
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  monetary policy.
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  But I think
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  what they're going to do is
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  they're going to
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  look at the tariff
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  rise as a one time
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  price increase,
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  almost like a tax hike.
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  And what financial markets
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  do tend to like is
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  when the fed is cutting
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  interest rates
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  into a slowing
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  economic environment.
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  And they're cutting rates
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  from a level that some think
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  is maybe a bit too tight.
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  All right.
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  So Kurt, here's
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  the million dollar question.
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  As you mentioned
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  volatility is near all time lows.
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  The stock market S&P
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  and Nasdaq are near
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  all time highs.
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  Credit spreads are really tight.
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  How long do you think that
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  this kind of quiet, picnic
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  like atmosphere for
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  the markets is going to last?
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  So yeah the equity market
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  we think
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  is still in a bull market.
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  And so we'd be buyers on dips.
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  Fixed income
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  is going to provide some cushion.
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  And that's important.
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  the bond markets
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  telling us that there isn't
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  really any concern about
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  companies defaulting
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  if there's not a recession, that
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  shouldn't be
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  a big concern either.
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  So how to get that cushion?
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  Interest rates there around 4%.
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  Add some investment
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  grade corporate bonds.
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  You're approaching 5%.
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  That's good income.
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  Gold is another diversifier
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  that you can add
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  into the portfolio
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  that we think has upside.
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  So those are some strategies
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  that you can blend in.
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  You're not just taking
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  risk in the markets,
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  which as you point out or at all
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  time highs.
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  You have a diversified portfolio
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  that is taking advantage
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  of the upside,
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  but with some
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  volatility to dampen.
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  Great.
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  Thank you Kurt.
• 2:43
  My pleasure.
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  Good to be with you.
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  Picnic time. That's right.