Chris Adair: Good afternoon. This is another episode of “Three in Five.” I'm Chris Adair, I'm head of strategic partnerships at SLC Management, and this is our annual holiday edition, where I get to turn the tables and actually interview Steve Peacher.
Steve Peacher: Hey Chris, glad to do it not so glad to be on this end, but glad to be able to do it with you.
Chris Adair: Understood. And it's always, I look forward to this episode every year. So, this is actually we're celebrating another event with this episode, this is actually our one hundredth episode. And so, Steve, I was wondering if you could maybe spend a little time and talk about the genesis of the “Three in Five” podcasts and milestones that we've reached here now that we're celebrating our hundredth episode.
Steve Peacher: Well, this started, I think I was talking to our marketing folks about, what can we do that's a little bit different in a crowded world out there? And I thought, let's do a podcast let's do this thing. We'll call it “Three in Five.” And they're like, yeah, no, it doesn't, it doesn't sound great. I'm like, no, no, it's gonna be great. And I think they decided to humor me, and then they went with it, and I'm sure they weren't sure if it was ever going to go anywhere. And so we did a few. And then one day I got a call from my mother. She goes, ‘oh, I listened to your podcast.’ I’m like, ‘how do you know about the podcast?’ She goes ‘well, your nephew found it somehow.’ I'm like, how does he know about it? She said ‘I don’t know how he found it’? So I told her marketing folks said, I don't know if this is a good idea or not, but I know we have two listeners. So you know, that was, that was the beginning. And but you're right. We've done a hundred, and I hope that it's had as much of an impact internally, because we have a big organization, a lot of different offices. And it's been a way at a minimum for people within SLC across the different businesses to hear from others who they might not have normally met because they're in a different officer or in a different area. So I think it's been kind of cool.
Chris Adair: Great, great. I remember one of the first episodes we did was with Sonny Kalsi, and one of your last questions was I think it's somewhere along lines is his favorite rock and roll band. So I always look out for those interesting questions that that have come up along the way. So, Steve just maybe we'll talk a little bit about the markets. 2023, obviously a pretty telling year. You know, 2022 last year was a very tough year for fixed income in general. You know I think we finally have seen the Fed Cycle get to a point where we're they’re on pause now, and markets are starting to act accordingly. Certainly risk on assets are. So I was thinking maybe, could you share some of your insights on looking back at the year 2023, and maybe what your investments perspective is looking forward?
Steve Peacher: Well, I mean, you focused on the fixed income markets. And I think it's I've been all about interest rates, as you implied, you know, it feels like a distant memory. But well, first of all, I think a rise in interest rates are so powerful, you know, just like a big drop in interest rates is so powerful, and we had such a big rise in Fed funds. We had an inverted curve, you know, and what feels like a long time ago. But it's only some number of months ago was the banks. We had SVB run into the problems they had. And First Republic and Credit Suisse, I think you can definitely trace all of that to the aggressive moves by the Fed and the resulting inversion of the yield curve. And I think at the beginning of the year I think the consensus was rates are up, inverted curve, big signal. We're gonna be in a recession by the fall, if not the summer. And then, when we had the bank problems, I think people said, yep, here we go, the bell's ringing, and it's gonna get really ugly. And I think it was certainly not the consensus for you to say we'd be sitting here in December with the S&P up 20 some odd percent. The economy doing really well, unemployment still under 4% and inflation coming down. I mean, we're getting close, depending on the measure to that 2% target of the Fed, so I don't think people would have expected that. Certainly it wasn't consensus going back to the beginning of the year. I think that's what surprised me so much that with the interest rate move that we had in 2022 going into 2023 it hasn't resulted in some of those things. I think looking forward, I think one thing that's underestimated is the lag with which an inverted yield curve works. And so I actually felt pretty good about 2023. I, makes me nervous. It's so strong it makes me nervous going into 2024 in part just because you always have a long lag effect between the inverted curve and the economics impacts of that. I don't think we can signal the ‘all clear’ yet even though things feel pretty good today.
Chris Adair: Yeah, I think I saw that Fed funds is estimating an 85% chance of rate cuts, I think, by June of next year. So…
Steve Peacher: I wonder about that, because I personally think the Fed will be slow to cut. So…
Chris Adair: I agree with you. Actually, yeah, I think I think they, you know, it was pretty hard for them to do what they did. And I think they want to be overly cautious unless we just see a big risk off event take place. So, Steve, this is obviously our holiday edition. So, I was thinking that you know, we always like to spend some time and have some fun around the holidays. If you could count, or if you could recollect, how many times do you think you've seen “It's a Wonderful Life?”
Steve Peacher: Oh, my gosh, I've certainly seen it 10 times or more. I don't even know, but a lot.
Chris Adair: Well, okay, well, let's see, I thought I figured I'd ask you a little trivia questions about it. So my first question is, where did George and Mary plan to spend their honeymoon before they ended up giving it up to save the bank?
Steve Peacher: Oh, boy! Where, I know they were in Bedford Falls, right? Was that the name of the town?
Chris Adair: They were.
Steve Peacher: I dunno where they were going for their honeymoon…
Chris Adair: They were going to New York, and then they were going to take a cruise ship over to Bermuda. So, let's see Steve. Here's another one here. See if you could get this one. At the end of the movie a bell rings on the family Christmas tree. Do you know what that symbolizes?
Steve Peacher: Oh, well, that's the famous line, right? Something like when you hear a bell ring an angel gets its wings, I think something like that.
Chris Adair: There you go! There you go! There you go! Alright last one here, if you if you recall one of George's good friends was Sam Wainwright and you know he tried to get George to go into the plastics business of all things. Right, if you recall. Do you remember what Sam's calling card was?
Steve Peacher: Oh, no, he was a big personality, that's what I remember about the character. And…
Chris Adair: It was ‘hee haw!’ He always said ‘he haw!’
Steve Peacher: ‘Hee haw!’
Chris Adair: Exactly right. I guess we'll close it up, being the hundredth episode. And wanted to just see if you had any thoughts on where you think you know the next iteration of “Three in Five” may be going?
Steve Peacher: I don't know. It's something, we’ll, I need to talk to folks about, but we want we need to keep it fresh. You know we've had a lot of over the 100 and a lot of people within SLC, and what's cool is that we've got, we do a lot of different stuff, kinds of things. So we've had a lot of people with different expertise. It's been fun to be able to highlight all of those people. I think probably if we can move to some outside guests, maybe more as a way to keep it fresh, keep this something that people want to listen to. Maybe my big idea would be to have you be the MC going forward. So maybe that's….
Chris Adair: Oh, my goodness, I don't know about that one. Anyhow, I'll listen, Steve I just wanna wish you and your family the best this holiday season, and to obviously to all our employees at SLC and all of our clients, wish everybody a prosperous and healthy 2024.
Steve Peacher: Yeah, same to you, Chris. Thank you.
Chris Adair: Thank you.
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