Hey tellers it's good to see you again Oh i think there's you know two pretty Big challenges for tech coming into Earnings season and you know one was Going to be just kind of pull forward of Demand And i think that's probably what you Know kind of caught netflix up and and The second was going to be inc input Cost inflation and that seems to be what Sort of bit amazon so i think you had These two themes that even if you beat On earnings Those two aspects of the outlook were Going to be really big challenges and They certainly trip stuff up and then Second is just the macro impact of you Know high inflation high interest rates And and tech obviously a longer duration Equity so much more sensitive to that so A little bit of a triple threat here um We are actually feeling much better About the outlook for tech you know over The next few months but i think around Earnings those are the things that have Been the biggest challenge i'm curious When you think about the queues are call Options and Asking about your trade here an easier Way to dip your toes if you don't want To actually go all in and buy Yeah i think it is you know We talked the other day tower i think You know this is kind of a three-step
Process and we're probably a little bit Early in the process in terms of Re-engaging into tech exposure so we do Like a kind of risk-managed almost more Passive approach of owning like you know 10 out of the money you know july call Options on cues just so you do have some Exposure there that if rates turn if Inflation declines the way we expect it To that you do have some kind of Exposure in place so something like huge July 350 call options or something along Those lines makes a lot of sense to us How do you think then about pivoting to The more defensive nature of this market We're going old school i mean i was Speaking with gina martin adams who was Saying staples actually are starting to Look expensive given the massive sort of Input um back into some of the the Staples Does that make sense in this Inflationary environment Look i think people are definitely Hiding in the more defensive parts of The market i think you know both Utilities and staples are are areas that Seem to have outperformed quite a bit we Actually do like hedging at staples Particularly around earnings and and it Really gets into that input cost Inflation theme you know whether it's Commodity prices or today we got you Know the employment cost index
Accelerated quite a bit in the first In the first quarter and we think those Could both be challenges to the consumer At large but also to the staples sector In particular You know earnings of volatility for Those stocks was actually quite high Last quarter nearly six and ten staples Stocks beat their options implied moves Which is which is pretty unusual for What's usually a quieter part of the Market so you know it's an area that's Outperformed quite a bit we do think They're kind of in the crosshairs Related to this input cost inflation Theme and and we do think it makes you Know sense at least to hedge that Exposure and that outperformance around Earnings season just something like may Put spreads to uh to reduce that risk Finally here Yields higher that is the theme it's Been the theme for the year are you Looking at that further continued path Higher for yields Look i mean our view is that inflation Is peaked and over the next couple of Months you're going to start seeing you Know a gradual but then after that very Steady decline in inflation and from our Perspective that will allow the fed to Be a little bit less hawkish and its Rhetoric and and frankly should get you Know rates a little bit lower as the
Year progresses and and that's one of The things that makes us a lot more Positive about parts of the market that Have been so negatively impacted by that You know large cap tech being part of it So look i think you know most people Would say the the the path for rates is Higher um for us it does feel sort of Fully priced with a lot of rates Volatility so i think simply getting Some that raised volatility a little bit Lower maybe taking the sharp edge off Some of the fed rhetoric would just be Really really welcomed and if that Happens alongside a decline in inflation Which is you know your previous guest is Talking about has been the number one Kind of bugaboo for markets you know we Think that stacks up pretty well for Risk reward to improve in tech and some Of these other parts of the market that Have lagged
