A Note From Nashville: Hightower Investment Summit

By Mark Masterson on May 12, 2022

Good afternoon

Dave Emma spent the last few days in Nashville, Tennessee at our Hightower Advisor Summit. He wanted to pass along the below notes from one of the breakout sessions.

It was 2 days with our Hightower Partners from all over the country, our Hightower Investment Solutions Group as well many asset managers from all over the country.

There was no shortage of intellectual capital and a willingness to share thoughts, perspective from all.

One of the highlights of the summit was the session on Market Outlook: A Story of Volatility.

The panel consisted of the following Individuals:

• John Donovan (Managing Director, Private Wealth Solutions Blackstone),
• Kevin Winters (Executive Vice President, Alternatives Credit Strategist PIMCO
• Stephanie Link (Chief Investment Strategist and Portfolio Manager at HighTower.

Below are some of the highlights from the session:

• Stephanie Link runs a Large Cap Core Equity Strategy at Hightower.
  • The portfolio consists of approximately 40 companies with a value tilt very similar to our New Sovereign Equity Strategy.
  • One interesting caveat is that Stephanie speaks to every CEO personally on the companies she owns.
  • The consensus amongst the CEO’s is that inflation will remain elevated.
  • Majority of CEOs believe it will continue into late 2023 and some expect it to be thru 2024
• Fed Neutral Rate is 2.7% to 2.8%. Current announcement from Powell on reducing the Fed balance sheet will take on average of 6 to 8 years under his current plan. This confirms how far the FED is behind the curve.
• PIMCO commented that they have raised their call on a recession over the next 16 to 18 months to 30% chance. Strategas raised their call to 40% this week
• Another concern around recession, is that the FED has only engineered a soft landing 10% of the time since 1930
• Fundamentals Matter Again! – Balance Sheet, Cash Flow Earnings, Pricing Power, and Management

This was an interesting slide from one of the presentations. 

The point of it is to suggest that the model is not sustainable….

And – a good slide that summarized the risk around a recession……

Take you pick – if it’s a yes, or a no

What does this all mean?

Many of you follow Marks Morning Roundup on a daily basis.  The panel mentioned above confirmed our overall thinking and perspective.

Our client portfolio positioning since 2021 has been designed to capitalize on the rise of inflation.  We also saw the risks of a Fed tightening cycle and potentially slower growth that comes with that.  Clearly our overweight in precious metals and real assets has served us well in these extremely volatile markets.

We remain well positioned as we move through the summer and for either scenario – the soft landing or a potential recession.

Our number one priority is to protect your wealth in these volatile times. We will remain overweight cash and underweight fixed income as our hedge against risk and our belief that the capital markets will continue to be volatile through the summer. 

As always – we are here to answer any questions you have but also remain prudent and diligent in these volatile times.

Closing with one of the quotes from the forum about economists:

3 guys decide to go bird hunting.

The 1^st gentleman shoots and misses above the bird

The 2^nd gentleman takes his shot and misses below the bird

The 3^rd gentleman shouts out “We got him, close enough”

That sounds about right!