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- So Jackson Hole is Friday.

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Yes. And then we've got
some minutes coming out

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on Wednesday.

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What are you predicting?

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We see in the minutes what
kind of language you're,

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you're expecting and,
and also on Friday too,

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is he gonna guide us in
any kind of direction.

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- We've given this a lot of thought.

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At Wisdom Tree, we, what we're
thinking is about four cuts

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this year and a generalized reluctance

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to think about fifties rather
than 20 fives out of the Fed.

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And it's kind of a, if you,
you have to game it out.

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Remember who hikes rates or cuts rates?

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Human beings, human beings do that.

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And those human beings just
had the scare of their life.

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What? Two or three weeks ago
the VIX went spike to 50.

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And what was causing that was, well,

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we had a hike from the Japanese

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and then we had a quick repricing

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of federal reserve rate cuts

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from about three cuts in
calendar, 24 to about six.

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It suddenly on that weak CPI report.

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So now if you're j Powell

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and the primary risk to the
market is Uhoh, what I just saw,

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and then y you carried trade
the first week of August.

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There's no sense of urgency

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to do anything other than
a series of 20 fives.

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That's what Greenspan used to do.

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Bernanke only kind of changed
that up because you had Lehman

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and Bear Stearns going
under the street might

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be getting ahead of itself.

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It's a series of 20 fives
is what we're thinking.

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And look, the street is looking
at 220 basis points worth

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of cuts deep into 2025.

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Who knows, who knows
how far they could go,

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but that is an aggressive easing

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cycle that's being priced in.

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It might be overtly aggressive.

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- I've heard like they're
expecting 50 basis points maybe,

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and it seems optimistic.

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And in general, I would say
that the, there's been a lot

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of optimism about cuts all year long

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that keeps getting scaled
back or reaching reality.

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- Why? Why would you slash rates by 50?

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The labor market is
deteriorating ever so slowly.

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There is very little in the
way of corporate defaults,

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which is the reason you
would start slashing.

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You have at this point a defacto easing.

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That easing that has occurred in,

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you pick it five years,
10 years, 30 years.

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A 10 year keynote was, when
was it? In the springtime?

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It was about 5%. Now it's
about 4% right there.

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That's four easings just
not on the part of the curve

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that we associate with it.

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We got a hundred basis points of respite

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inside the bond market in
the last six months or so.

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There's no sense of urgency.

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And again, you have to
game theory this thing out.

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You start slashing by 50.

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What is that going to do to the yen

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and all the risk assets that we saw?

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I mean over there in the EK 2 25

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Japanese stocks crashed in
a three I I've looked back,

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it was over a three session window

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that was worse than October of 87.

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What is the urgency? Calm
down. I think they know it too.

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It freaked them out. It freaked
us out. It freaked everyone.

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So calm is the, is the lay of the land.

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You can see it in a lot of
these, a lot of these pricings.

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Now I think we're looking at 20 fives.

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- So there's been a lot of
money made this year from

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investors in AI and big
tech going into 2025.

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Where should they be putting their money?

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- Well, if you think about

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where we could be surprising economically,

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just taking the United States
Street consensus, depending on

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what day you're checking it
is something on the order

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of maybe 1.9 or two per 2%
real GDP for calendar 25.

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And so suppose that you view

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3% is less probable than maybe plus

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one, something like that.

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So you're thinking maybe zero to one,

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not a cataclysmic situation,
maybe not even a recession,

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but just a ho hum type
economy that you would get

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as a lagged effect from
j Powell giving you 525

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basis points of hikes.

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So imagine that that's your thesis.

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Look at the market's internals
for the last, what, seven

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or eight weeks utilities.

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Utilities have been. You mentioned ai.

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That's been kind of that backdoor AI play.

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It's been, let's say

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for the first time in, let's
just go with many years,

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utilities directly tied

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to interest rate
directionality almost to a T.

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It's beautiful from a macro perspective.

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And Staples also doing, doing well.

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And earlier we were talking
about consumer staples holding

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up making 52 week highs.

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Despite the talk of food price controls,

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staples have been doing pretty
well as a sector, utilities

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and staples from market.

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When the market is talking
to you, if you're the type

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of person who believes the
market can communicate with you,

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that's not very good market internals.

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However, think about it from
this perspective though,

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if you're thinking about
some of the weakness,

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even though the Mag seven
has come ripping back,

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there was a question mark put on the mag

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seven earlier this summer.

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Basically with the release

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of the June CPI report back on July 11th,

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which is well over a
month ago at this point,

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we finally got our question
mark on the AI sector.

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But if you look at the
other 493 of the s and p 500

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or an equal weighted 500 of
which we're competing with

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that type of thing at
Wisdom Tree all the time,

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broad market participation,
the market is spread out.

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You don't like the utilities
and and Staples situation,

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but banks are on.

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You like to see that.

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If our primary risk is the
global financial crisis from 15

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years ago, regional banks are on.

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That was the primary risk
of 15, 18 months ago.

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It's a generally healthy market

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with deeper breadth than you
may have anticipated amid the

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fact that we were just in two minutes ago,

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had the VIX at 65, that
was three weeks ago.

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But generally a healthy market

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that wants to be in a bull trend.

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- Thanks a lot, Jeff.
- Much appreciated

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- And thanks for watching.

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