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Our next guest says, the consumer is the key to the market puzzle. Joining us now is Alex McGrath, North End Private Wealth CIO. Alex, it's good to see you. So, you say, Alex, I like this that the the market, you say, seems to be mirroring our national mood here. What what do you mean by that, Alex?

You know, it's, you know, we're coming off the back end of a pretty long inflation battle here with rates being at historic peaks. And, you know, you look at the underlying macro data that we're staring at every day, and it's not exceptional, but it's not bad either. It's just kind of in this middling phase. And you, you know, certainly a much better start to this week than we had last week. But, you know, how much of that was really, like, recession fears or how much of that was really, you know, we we certainly favor that had a lot more to do with that jobs number coming the prior Friday. And then you had all these whispers coming out, you know, we potentially a 50 basis point cut got whispered into a quarter basis point cut. And then you had some turmoil there throughout the week, and now we seem to be back on track. So, we'll see where it goes, but we're just kind of in this middling spot where, you know, growth isn't fantastic, but it's not bad, and, you know, jobs numbers aren't horrific, but they're not great. We're just kind of in this middling situation here.

What's going to change that, Alex? What's the next, I mean, is it going to be the Fed? Is it something else you're looking to?

I would love to say that it's going to be the Fed riding to the rescue, but, you know, we all know that any kind of cuts or any kind of actions the Fed's going to take is going to take time to work through. And I don't think you have to look much further than a lot of the numbers we've seen from the consumer discretionary companies where they're slashing forecasts because the demand just isn't there like it has been. And that's not entirely surprising. I know we we keep hearing, you know, inflation's way down, inflation's way down. And that, I mean, certainly from a year-over-year perspective, that is absolutely true. But the problem is, is, you know, there's 20 to 30% built up in there that's still increasing on a month-over-month basis. And it's just, you know, the consumers got to get tapped out at some point. And, you know, I'm not saying that's, like, a death and destruction phase coming, but you are starting to see inklings of that. And, you know, the Fed lowering rates will help that down the road, but I don't know that there's any, like, super immediate fix that they can do from the Eccles Building in DC.

So, Alex, you know, if that's your view of the Fed, the economy, uh, the consumer, um, how does that sort of inform, shape your view of the markets, Alex? How do you want to be positioned in the equity market?

Well, certainly, certainly, we feel like the next couple of months here could be a bit rocky. That's, you know, not again, not death and destruction, but just more taking a, you know, tactically defensive approach, you know, going out and grabbing utilities, industrials, health care, real estate, consumer staples, you know, typically defensive positions like that that are interest rate sensitive should be a good spot to sit in right now, just because with interest rates going back potentially going backwards, you know, and those defensive positions should buoy a lot of those equity or that section of the equity market. And so that's kind of where we've started to shift some things. That doesn't mean we're, like, wholesale abandoning the large tech growth trade, but it's just, like, repositioning some of the edges to get a little bit more exposure into those more defensive positions.

Gotcha. Where in tech still makes sense to you here?

It's, you know, certainly, or I would say to us, it, you know, semiconductors are really the new industrial, in our opinion. You know, that those are just pieces that go into everything, you know, where you're looking so that that would be the number one spot, you know, like certainly like, you know, the large cap social media companies, I I don't really have a ton of thoughts there, but, you know, for us on the tech side, it's all about semiconductors.

What about for fixed income investors who are listening right now, Alex? What's your guidance?

Oof, that's that's been that's been an interesting conundrum for the last two years there. Um, you know, certainly, you know, when all this started, the floating rate looked great. You know, the shorter end of the curve was fantastic because you were participating in all of those interest rate hikes along the way, you know, getting upwards of 6% on basically market neutral money. As we start to look at rates coming backwards, you know, it's it's probably time to start taking some duration there. You know, we've started to do that a little bit, not going way out on the curve, maybe in that one to five range. And, you know, so that's kind of where we're sitting on the fixed income side, but, you know, floating rate's been great this whole time, but everybody that's sitting in those floating rate in money markets, it's probably start probably time to start moving that duration play out a little bit. And again, don't I'm not saying play the, you know, 10 to 15 or 20 to 30 curve, but certainly starting to bump that out a little bit should pay some dividends for people.

And finally, Alex, I know you're watching the consumer real closely here. What what are you going to be sort of focusing on metric-wise in order to figure out the health of the consumer going forward?

You know, certainly keeping an eye on retail sales. And the last measure we got was fantastic on that front. So, we'll kind of see what the next look looks like and as well as the revision. But it's really for us watching the consumer discretionary spending space and those consumer discretionary earnings reports to try to get a good idea of what that looks like. And that will certainly that those are the number one things that we're looking at as it concerns the consumer going forward, like what does that spend look like and how does that translate into the next couple of quarters? Because that ultimately will depend will alter our asset allocations.

Alex, thanks a lot. Appreciate it.

No, thank you for having me, guys.