can we just start with the big draw down we called it that yesterday the aggressive selloff to pick up the pieces this morning sam had to approach a sell off like the one we had yesterday well i would approach it the way tom seems to be approaching it that is when life gives you lemons make whiskey sours so basically you look to the history that you know history tells us that whenever we have had a 4 percent one day decline that we usually see a bounce of about 1 percent the day after thats happened about two out of every three times but then we sort of trade sideways for the next week as well as the next month before resuming an uptrend three months down the road so basically you know i think investors just have to hold on to their hats right now sam ive been dying dying going to talk to you about a concept i heard maybe 10 days ago which is a lot of good ideas out there in common stocks but you cant get scale you cant fire countable number of stocks do you see a far a find that youve got a number of good ideas and its hard to find other good ideas well i think what youre finding is that as time goes on you find that there are fewer and fewer companies on which you have solid conviction because what our analysts do is theyre looking six to 12 months down the road theyre not really looking for the next couple of weeks and so yeah they take a look at the change in economic projections and earnings forecasts look also at momentum and sometimes that list tends to get trimmed as a result but we still have a solid count of stocks that we regard as being five star or strong buys sam how do you reject this idea that were going to see an earnings decline that has not yet been priced in its what we leave blackrock with saying and this is what my falsone of market stanley has put out there thats basically what the bond market is reflecting is a work that the fed is going to do and that will essentially crimp the activity of a lot of companies well i think its a logical assumption that thats going to happen traditionally in bear markets associated with recessions since world war two weve seen a one third trimming of the p e ratios but since the market tends to anticipate the end of recessions by almost two full quarters we have to in a sense wait two more quarters into the bull market but before we get a trough in earnings right now weve already seen reductions in estimates q3 earnings are now expected to be up four point two percent but on june 30th they were expected to be higher by 10 and a half percent in terms of 2022 22 and 23 estimates now were looking at six point eight percent for this year versus eight point nine at the end of june and next year seven point four percent growth versus 8 8 so were already seeing a reduction in forecasts sam id love to squeeze this in just a little bit more of a sector focus this looks it takes a bit deeper financials its a bit cold at the start the deal its a going off right to climb and get into the banks hasnt worked out energy now in focus for a lot of people this fed is set to crush growth thats the fear that a lot of people have if theyre going to carry on hiking interest rates by 75 75 75 do i want to be long anyway do i want to be long financials given the expectations weve got the fact about cpi report well historically what you find is that consumer discretionary technology and financials are underperformers in a a hefty inflationary environment which is what we saw back in the 1970s we are looking at financials that are trading at a slight discount to their long term pe ratio so about 5 percent discount whereas energy is trading at a fifty five percent discount to its average pe over the last 20 plus years so i would tend to say things are done more on a relative basis and right now on a relative basis investors are gravitating toward the defensive consumer staples utilities as well as the inflation hedges of energy and to a lesser extent materials