what does jogging in place mean for a market thats been a moonshot since october when we think about the market and the risks here going forward theres not a whole lot of upside risk here but i think that the downside risk is somewhat limited because if we think about where we are with the markets we are in between in between the inflation spikes and the fed hikes but also waiting for the economy and profits to sour so i dont know that there is a whole lot of upside catalysts in a world where profits are just better than feared we need to see some more out of the profits landscape in order to get some more upside from stocks that have already rallied really hard and that have already experienced some pretty high valuations but at the same time until we see some more souring in profits in the economy i think were in an environment where stocks are essentially jogging in place where we are today and thats not just for stocks i think its similar for yields the pop in yields weve seen more recently i would attribute that mostly to the pop in growth yes there was a fitch downgrade yes were seeing some inflation break evens move a bit higher but really its all about growth if we think about this higher yield environment since may since the may fomc meeting so if we consider that environment you know i think that yields to for the rest of the year could kind of chug in place until next year your chairman jp morgan this is english major out a tough cfa which i think is the coolest thing going i cant imagine what the cfa was like for you coming out of that wonderful background you write the documents at jpmorgan you actually craft the documents that youre putting out what are you writing right now about 6040 right now if we think about the 6040 its had a huge rebound over the course of this year last year the 6040 was dead but i think whats important to think about with diversification is that markets and the economy look in opposite directions markets are very much forward looking the economy is at best looking at where we are today but also looking backward at the data weve already seen and if we look at periods in history where the 6040 has struggled take 28 take 1974 if you look at the next year 1975 if we look at 2009 those were by no means good economic years but you did see the markets rebound i mean 2009 is a great example where you see markets bottom in march we start to get out of recession in the summer and actually the unemployment rate continues to rise until october i think thats a helpful guidepost for where we are today in that the market has priced in a whole lot of bad news and a lot of risks and threats and we have yet to see all of them crystallize but the market is already sort of looking a little bit beyond there and thats a good environment for diversification what do you say to a client who theoretically comes up to you and says hold on this time is different inflations going to accelerate these bonds are going to be worthless its going to recur valuation of the stocks of the stock holdings that you currently have were focused on something thats really problematic we want to just hide cash i dont see how you can be calling for yields to go back down to something that was normal what do you say to them ultimately if we look at cash right now clients love a guarantee if you can get a guaranteed 5 in a cd that seems great but the reality is if you think about something like a six month cd you have some reinvestment risk there when we think about the arc of the year and with yields where they are now with above trend growth well above trend growth really for four quarters in a row if we even start to see slightly sub trend growth youre going to start to see yields come down if we see inflation soften a little bit more youre going to see yields come down does it mean they need to crater this year and again they could be jogging in place a bit but as we head into next year and we look at that 12 month outlook yields can start to come down so when you sit in cash you have this opportunity cost where your income can potentially come down but also you dont get the benefit of the upside within stepping out a little bit and in the risk spectrum to bonds you can potentially lock in income for a longer period of time and in addition have that potential for capital appreciation weve been talking about the auctions this week and how the us treasury department is selling a greater amount of debt are you saying this is a good time to buy that 4 on a ten year yield to lock that in seems like a really nice opportunity the window for the bond market has been extended over the course of the summer it is of course a reset back in terms of that recovery that we were hoping to see throughout this year but it does extend that window of opportunity from an entry point standpoint one of the biggest challenges that investors are dealing with today is price where do you find something at a reasonable valuation now i will fully concede that if we look at debt and deficits over the next decade plus with deficits coming in at five and a half to 7 on average that is historically high and we are going to deal with a yield problem over time but i think given the economic backdrop in the near term this is a pretty good entry point what does this sell right now at a high net high net worth people about cash at a 5 yield are they comfortable with that or theyre saying wait a minute why cant we buy more apple you see the clients are comfortable with it because again you havent had that type of yield in so long but i think getting back to your question about the 6040 and how we broaden out that allocation were also seeing that people realize this is not a market for for easy money its not just that youre going to experience data thats going to go up so people have to be a little bit more discerning in how theyre investing you know not only around the world but in terms of types of vehicles thinking about alternatives to enhance different outcomes for income diversification capital appreciation so i think that people are really sharpening their sense in this time active management wins into 2020 for active management will beat index take a look at profits take a look at companies even within the same sectors or industries youre seeing a lot of differentiation in terms of how management is handling higher prices higher wages more headwinds thrown at them so certainly it is a time to pick and choose which managers and which management of companies are doing the right things in this environment