Charles’ Take: The Case for Luxury Retail

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He's earned decades of Wall Street success. A lifelong student of the market

who learned to navigate the world of finance with unshaking confidence and underdog

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All right, folks. My net guess rather says that while many narratives from 2025 have shifted

to 2026 have, you know, they sort of stayed the same. Would work in 2025. Won't

necessarily work this year. So I'm going to bring in a went through capital management

there. Say Adam Coons and let's talk about the differences, right? You got to 2026 narratives.

So these are essentially narratives that were already in place as it came into the year for the

most part. Yep. And and they're still here. You know, I started a segment before this.

The top 10 names that they all but two are associated with artificial intelligence.

We're waiting on the Fed. The worst Fed at some point that started cutting rates.

Were you in inflation? Are you concerned about that right now?

Well, I think it's something we got to watch. It obviously affects a lot of things.

You've got kind of this tug of war happening right now. You've obviously got the inflationary,

short-term inflationary pressure of oilage or less gas kind of hit on. So that is a shock.

But long term, you've got to think about what AI really means. AI is deflationary.

So you've got this dynamic that ultimately you match that with an aging population.

All things that are there to really create disinflation. I think is a bigger risk long-term.

Now in the short term, obviously we're going to have some inflationary pressure,

but long-term disinflation. I mean, the irony is that for your risk here,

the labor market, you know, you know, you hit upon that and the AI trade dislocates.

You know, listen, looking at it from Marvell and Broadcom just last week,

that doesn't feel like it's going to happen. I want to move quickly because I want to get to

some of your ideas. But also, you're sort of marching orders with respect. You want to folks

to still kind of be defensive, like low-vol, quality factors, it's like Cameron.

They oppose utility as health care. Again, my only problem with some of this is that, well,

they got it a little bit expensive on an absolute basis.

They did. So I mean, it matters, right? And like Cameron said, starting point matters.

And so defensive has worked so far this year. I think this is starting to become that pivot

point where we're starting to look at where can we take risk as you see markets dislocate.

It obviously hasn't been a tremendous dislocation. We're kind of just chopping around.

But this is definitely when you get your shocking list out, start to look for,

you know, if you've played defense, if you've been embedded in a low-volve,

you can't. Where do you pivot? Where do you pivot, too?

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Well, software is looking phenomenal. A couple of weeks ago, we were playing taps.

And now we're saying, you know what, maybe we were premature.

All right, folks, so here you got into it. You know, and again, you can't really see it,

but it was around 360 to 470. That's a huge move in a blink of an eye.

Service now, again, a hundred bucks to 123, another huge move, but still,

they're down significantly even under key moving averages. So these are still worth buying.

They are. See, I think you've got a really differentiated. This is going to be when I said,

what worked last year probably isn't going to work this year, is that this year is not going to be

all, you know, high ties lift all boats. You've got to actually be a little bit more of a stock

selector. And so that's why we like into it. Service now because we think AI ultimately is an

enhancer for those business models. There are definitely some software names where AI is deaf,

but for those two, we like it long term. Let's talk about Louis Vuitton. It's another name

that you like here. And I guess I don't know what's going on here. You know, I mean, I know Gucci's

had some issues. And now Louis Vuitton, they don't have to build a rope up anymore.

They do not. You can just walk in now. Yeah, no, we're waiting. Yeah. And maybe that's why

the stock is a buy a little bit. Yeah. So I think you look, the reality is the K-shaped economy,

the Shake K recovery, however you want to play it is real. Now, we can, there's a lot of things you

can talk about with that. But when you're talking about how to invest, it's here. It's probably not

going to go any way anytime soon. So what does that mean? Is that that kind of top 10%

that also owns most of the market that are doing just fine. And that's not comfortable to say,

but they're still spending. And so when we're looking at that, when we're looking at retail,

how to play a consumer that continues to be fairly strong, we like to high-end Louis Vuitton

is one of those things. Good stuff. Good stuff, Adam. I'm really appreciate it. Thank you very much.

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