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Meet the Masters – Eagle Asset Management’s James Camp. We discuss portfolios for the long haul, Modern Monetary Theory and Yoga

 

Trevor Chambers:

Hello, everybody. It is May 13th, 2020. Welcome back to Meet the Masters with Olde Raleigh Financial Group. Meet the Masters is a collection of interviews, with subject matter experts that have deep knowledge, and experience in various parts of our economy. Today, I am fired up to have James Camp with us. James is the Managing Director of Fixed Income and Strategic Income at Eagle Asset Management. James, welcome to Meet the Masters.

James Camp:

Thank you so much. Pleasure to be here.

Trevor Chambers:

Awesome. I am fired up, because one of my partners, Blake Paro, he’s like, “When are we getting James Camp? We’ve got to get James Camp in here. I love this guy.” You’ve got some fans in Raleigh, North Carolina, my friend. Hey, tell me, where are you from? Give me your history, and then tell me about Eagle and what you guys do down there.

James Camp:

I’m from the mid-Atlantic. I grew up in the DC area; suburban Maryland, to be specific.

Trevor Chambers:

Oh, nice.

Been traveling South most of my career. I did my undergraduate studies in engineering at Vanderbilt. Then, went on to business school at Emory University in Atlanta, and sort of began a career in the bond market right after business school. A nice area to combine my growing interest in finance and economics with some technical background, that made me employable. Getting out of the gate, that was my foray into fixed income, was at a company called Ing out of Atlanta.

I was recruited from Raymond James early on in my career, post-graduate school, so I’ve been with the parent company now going on 27 years. I’ve been with Eagle for 24 of those years. Eagle is an asset management company. We are wholly owned by Raymond James Financial, but we are highly independent in terms of thought, deliverable, and execution of how we do investment management. That’s one of the true joys of my career, is that I have a team that I work with, and I speak directly to advisors like I am today. We talk about what we think, what we see, and how we do things. Being able to have that independent outlook, especially in the debt markets in this particular last 10 years at least, is a real advantage, I think.

Part of, I think, my joy in working with the company that I work for, Eagle and Raymond James Proper is, there is a truly high degree of independence. We are not resident in the crucible of Wall Street, and we have the luxury of truly being skeptical when I think that’s sometimes missed in capital.

Trevor Chambers:

Yeah, you guys, you use your stocks, and it’s good, for sure. Your guidance is fabulous, so thank you for that. We were talking before we got started. What is going on with the Fed? This has got to be so fascinating for people like you, in your part of this business. Tell me about that. Obviously, mark the date; it’s almost the middle of March 2020. What’s shaking?

James Camp:

We began a decided fee change in Central Bank, Federal Reserve activism involvement in capital markets in response to the financial crisis of ’08. That was a long time coming once the data in the real economy had begun to roll over. There was a period of months; really quarters before I think the Fed got their arms around the crisis as it was. I think that there was some collateral damage that may not have needed to be endured because of that sort of delay in response, if you will.

This go-around, as we look at the period in mid-March, we essentially shut the markets off. This is like nothing I’ve ever seen, and we certainly hope we never see again. This was not a recession. This was not a series of financial institutions failing. This was essentially the economy being put into a medically-induced coma. We basically said in mid-March, “We are stopping.” It wasn’t just real economic activity. It was the capital markets stopped. We had, as you recall, this period of volatility, and it wasn’t just equities. Across the capital markets; bonds, treasury bonds, gold, oil. The whole investible universe had these spikes in volatility for one reason, and one reason only. People were scared, they had no idea what was going on, and the only thing they wanted was cash.

The economic movie ended, exit doors got very narrow, and volatility across the capital markets spiked. The Feds saw this. This vacuum that was pulling asset prices down across the board, and making liquidity conditions just disastrous, the Fed had to reverse that inertia in that vacuum. They had to do so in a rapid response, a wholistic response, and to that end, a lot of recovery in the capital market is already beginning well in advance of us trying to get back to some semblance of normalcy in the real economy.

Trevor Chambers:

What do you see in terms of those green shoots, as someone might call them?

James Camp:

Let’s start with where we were. At the end of March, a corporation was unable, an investment-grade corporation, a going concern, a well-capitalized company, a name that every one of the people listening to this call would know, could not come to market to refinance their bonds. That basically created a scenario where you could have widespread, otherwise healthy patients, for lack of a better way to say it, exiting corporate America and having to declare bankruptcy, or worse.

What the Fed did by saying, “We may buy corporate bonds. We may be municipal bonds,” and by the way, they’ve done very little of this, if any. Interestingly, they can’t. They don’t have the jurisdiction to do that. They have the jurisdiction to buy treasuries. They have the constitutional jurisdiction to buy mortgage-backed securities, backed by the federal agencies. What they did is, they said to the Treasury Department, “You put up a special purpose vehicle. A special purpose facility. You put a deposit of $50-billion in this account,” because the Treasury can do this. “We will be…” the Fed, “… your funding agent to buy corporate bonds and other things. With a lever to that, we can buy pretty much across the board.”

The fascinating thing is, the market didn’t even need them to do a trade. They just needed to know that they were there. In April, we had record corporate bond issuance. That is absolutely requisite for corporations to be able to survive long enough to thrive, and grow after the pandemic passes. Kudos to the Fed. Kudos to the intervention that made the bond market function. We’ve had record corporate issuance, corporate bonds have performed well. Their spread, their yield advantage to treasuries, which got to three and four percent higher than treasure are back coming down, so the bond prices are going up, and companies are able to finance themselves. That scary moment where there was no ability to fund yourself as a corporation has passed.

Trevor Chambers:

The Fed put, if you will, continues to work. Is that what you would characterize this a little bit?

James Camp:

Yeah, I would characterize this more as a Fed bazooka in waiting.

Trevor Chambers:

Okay. Yeah.

James Camp:

They have told the market, “We can buy multi-trillion dollars worth of corporate indebtedness.” They will not do that. They will not need to do that, but that signaling mechanism is what we needed to allow the markets to begin to open back up.

Trevor Chambers:

All right, cool. Do you want to go into any more detail about the valuations, and risks of bonds in their respective buckets when you [inaudible 00:11:16]? Is there anything where you want to elaborate on that?

James Camp:

Yeah, I do in one sense. We came into this crisis with an economy that had been expanding for a decade-plus. We had also come into this crisis with a period of abnormally low interest rates. I would be a bit critical about how low, and how long short-term interest rates, and treasury rates were allowed to stay so low. That modified a lot of behavior. It modified investor behavior. Not with good counsel like I know you provided. It modified behavior in the reach for a yield, and it modified corporate behavior in this phenomenon known as share buyback activity, where $7-trillion was bought back in common stock, and much of that financed with the debt market.

We came into this crisis with 50% of the investment-grade universe rated BBB. That’s one level above junk, or high yield. The Fed can’t make a company that is not solvent, or not properly levered, or have good business prospects, they cannot make them solvent. They can heal markets in aggregate, but they cannot heal individual actors. There will be bonds that go below the BB level. There are bonds that are going to default. There are companies that are going to have to use the Chapter 11 rework to declare, and reshuffle the deck. We have mis-allocated capital in many industries, because low interest rates made it look easy to borrow money, and buy back stock. We are going to see a real tearing of well-run, well-managed balance sheets, well-managed companies, both as we invest in debt, or we invest in the income production side of an equity. Given in stock, if you will.

I am a firm believer that the returns to leverage, for leverage sake, or borrowed money, is gone. That era ended mid-March 2020. For me, couldn’t happen soon enough. The companies that are diligent, that reinvest, that produce cap ex, and productivity gains, and have balance sheets that have flexibility, they will come out of this on the other end the shining stars. They’ll continue to pay their interest on bonds. They’ll continue to pay their dividends, and grow their dividends. There are companies, and sectors of our economy that partially, in big part because of the crisis of hand, but some of it because of their own mismanagement, that are not going to make it.

Trevor Chambers:

Yeah. Capitalism destroy, and then the guys with the balance sheets, and the moat around their business model and all that, as always, gobble up. Obviously, we’re going to see consolidation in oil. I would imagine some consolidation in the airlines, cruise lines. You’re seeing strength in the, you know…

James Camp:

Yeah, there’s definitely going to be consolidation in the areas that you mentioned. We over-capacitated energy. We put way too much capital into the energy patch. We produced oceans of cheap oil. I often like to quip about this, but back in my business school days, going back a bit, we talked about things like peak oil. I remember thinking at the time, all of these prognostications of ultra long term assume a steady state of play. Steady state of the economy, a steady state of technology. I think they’re analogs to the pandemic.

When we began forecasting the disaster in the economy, the disaster in the human toll, we were extrapolating from a finite data set, and that data set changes every day. That technology improvement, that productivity improvement, the medical modalities and the like. All of that, I think, gives me a lot of hope going forward, in the future, but there are industries, and sectors in the economy that will struggle to stand back up: Airlines, cruise lines, travel and leisure, hospitality. Commercial real estate will look different. Residential real estate may look different. Names like technology, consumer staples, healthcare, all the areas that we’ve rotated towards in a post-COVID environment, are going to continue to grow, and continue to prosper.

Trevor Chambers:

You’re going to see the stress step. That, and the munis, and the corporates, there’s got to be some interesting opportunities coming around and all that.

James Camp:

The debt markets have been very generous, relative to treasuries. We have to start with the treasury rate. Obviously, treasury rates are low. They hit their all-time low yields at 35 basis points. By the way, the idea of negative interest rates US it’s probably not going to happen, stress tests from your [crosstalk 00:16:01]. We have hit the all-time lows. We had a secular bull market in big bonds. Generally speaking for treasuries that in about 35 basis points.

The part of the market that is most generous, the corporate market, there was a period in the recent past, and frankly today, where investment-grade bonds are trading. It spreads two, three, three-and-a-quarter percent that of the treasury rate. That’s a lot of cushion for both income, and for price performance as those prices tighten. The tax-free market, the municipal market, which is an area that we’re very active in as well, is a different animals. At least so far, year-to-date. Let me discuss that a bit.

Trevor Chambers:

Yeah. Please do.

James Camp:

There used to be a period of time where you’d buy immunity, you had an insurance wrapper, and you never thought about it again. It was the buy it, put it in a drawer, it’ll pay your tax-free interest rate, when it matures you’ll buy another one. Problem is, in 2008, most of those insurance companies, in fact darn near all of them, went away. This thing called credit risk, people started paying attention, “What am I actually buying here?” The medium market is a $4-trillion animal. It is very heterogeneous. There are great-quality bonds in municipals in every state. There are poor states, and there are poor-quality bonds in every state. Knowing the difference between the two, or the multiple offerings, is key.

The municipal market is highly retail-sensitive. the investor base for municipals is high net worth individuals. It is not the Federal Reserve. It is not the Chinese Central Bank. These are folks, and folks react, oftentimes, to headlines. I go back to when a certain analyst was on 60 Minutes saying we’re going to have hundreds of billions in default. Well, the outflows for immunity after those headlines hit are big. They come out of ETFs. They come out of mutual funds. They come out of passive vehicles.

The other side of that forced selling, or having to fund liquidations, is a manager like Eagle that builds separately-managed accounts, that has 10th graders in a room looking at screens saying, “Oh, my goodness. This tax-free bond that is being sold is at a level that is very, very cheap because they need to sell it.” The bond market is not efficient like in equity. It doesn’t have a market-maker. It has traders like us trying to buy value. What we’re seeing now is these headlines of political footballs going back and forth between Pelosi and McConnell. Obviously, we know the hot spots. We know the population centers of New York are struggling mightily from a humanitarian standpoint, and likely from a fiscal standpoint.

A lot of the medium market is yet to recover. It traded down significantly in March; the biggest volatility we’ve ever seen. Remember, we had 12 years of reserve bills coming out of the great expansion that we’ve had since ’08. Even names like airports. I’ll give you an example. We own airports across the country. Many of these airports have three years cash on hand. These are viable going concerns, but as soon as you say air port tax re-bond, people run for the exit. It makes the yields, and what we call the yield ratio to treasury get more, and more generous. I will tell you, on the back end of 2020, munis are going to be the star.

We come into June. We have big redemptions in June. It’s a quirk of the calendar when coupons come in. People are starting to realize that municipals have been oversold. A lot of it was massive outflows from retail, for no other reason than the supply/demand balance of who wanted them, and who’s selling them did not favor the sellers, but favored the buyers. We want to be a separate account, individual bond buyer as that flood of paper comes out. We know what we’re doing from a quality standpoint. We have credit scores, and credit ratings on everything that we own, that we internally generate. We have a national focus for our portfolios. We don’t buy a lot of general obligation debt of states. We know the pension problems are only going to get worse. That doesn’t mean we can’t buy a municipal bond from a certain state. We just don’t buy the general obligation. We buy essential service. We buy lease rev bonds. We buy special purpose type equities, et cetera.

A lot of different ways to play tax-free, but they have been the last to recover since this pandemic hit. I think they have a lot of upside from here. Many cases, the yield ration for a 10-year tax-free bond is in excess of two-and-a-half times the treasury rate. By the way, we get these crossover buyers in. Even if you pay taxes on your bond interest, munis are still cheap to you.

Trevor Chambers:

Yeah. A lot of people were selling stuff that they didn’t want to sell because they had to, or just got overwhelmed by the fear. Yeah. Selling into that market environment, that’s not fun. I talked to another fixed income guy about this a couple weeks ago. He was saying much the same things you were. Let me ask you.

You’ve got this bond environment that’s been definitely shook up by what’s happened. Moving forward, tell me about your views as a forward-y portfolio that is largely prevalent today. How is what’s going on today going to impact that traditional portfolio?

James Camp:

You’re talking about a balance strategy?

Trevor Chambers:

Yeah.

James Camp:

The balance strategy that allocates in bonds, and allocates in stocks, and maybe have a mathematical trigger for age, as you move through your investing in life, you’ll adjust those dials, is really a tried and true strategy. It forces diversification. A couple issues come up with that in the current term. There’s a solution for it, so I’ll get to that.

Trevor Chambers:

Okay.

James Camp:

The correlation between stocks and bonds, you have to be very careful. This is a big nuanced, but hear me out. If you’re an income investor, the average income investor with a 60/40 portfolio is going to look for yogi bonds, because they pay a big cash flow, and it’s going to look for yieldy stocks. What ends up happening in a case like that is, you conflate risk. Meaning, your bonds can behave like stocks if they’re high-interest, or higher-yielding, when stocks go down. Your stock that have high yields, like utilities and rates, typically have an interest rate sensitivity component. They end up behaving like bonds.

What happens with a lot of set-it-and-forget-it balance accounts, you get a current yield that looks attractive, and the portfolio does not hold up in difficult markets, and the dividends don’t grow. The second part of it is, there is a decided difference in buying in a holding fixed income today than there was 20 years ago. Credit quality changes. The interest rate environment changes. Even though we’re 65-70 basis points on the 10-year, it could go back to three. It was three a year-and-a-half ago. The idea of generating income between stocks, bonds and cash, but doing it in a fluid asset allocation sense, to us, is the only solution.

Let me give you another example. There are times in our balance portfolio… We call it strategic income… when we make adjustments. We increase equities, we decrease equities. Part of that is outlook, but part of it is how generous the cash flow is relative to the alternatives. If the debt side of the equation, lending money to a company, is more generous than owning a company and getting a dividend, all else being equal, we’ll probably favor the debt because it’s generally lower risk. However, in this period, you had companies that borrowed money at two, two-and-a-half percent, turned around and paid the shareholder four, four-and-a-half percent yield. We had a reasonably favored outlook on the equity market a year or so. We’re going to lean more towards the equity side. The key is using that asset allocation to mute volatility.

We came into 2020 already beginning to see the marginal rate of change data in the economy slowing. Forget COVID-19. Complete exogenous event, massively disruptive, all that we know, and all that we are learning. Coming into it, we’d already begun to see marginal rate of change data slowing. We had already begun to take our equity exposure, which was at 62.5%, downward. It was a conscious decision, late in the cycle, late in an expansion, with an economy still growing but maybe at the margins, slowing, and some bond areas looking more attractive to us to change the allocation. That has been extremely powerful to manage downside, and optimize income, and income production. It isn’t stocks, bond or cash. It’s all of them, and it’s in a tactical fashion.

There are also going to be warnings that I would let your clients know about. Companies may not be able to sustain dividends. There are companies out there that will have to suspend. There are companies that will have to cut. Our job is to look through the balance sheet, look through the free cash flow, look at the history, listen to the management calls, and make sure that cash flow that you depend on is not only stable and growing, but is protected. This is a period where you’re going to want to know what you owe. The separate account platform, individual assets, full transparency of that deliverable is great peace of mind in markets like this.

Trevor Chambers:

Active management, very important right now.

James Camp:

I would argue it’s never been more important than right now.

Trevor Chambers:

Yeah. Yeah. On the same token, when you have these such lower interest rate environments for so long, it’s like the Fed, right? I mean, passive, it has worked in that environment. That said, with this low interest rate environment, and all this skepticism, are we going to come out the other end of this to muted growth?

James Camp:

Trevor, I think so. If you look at the functioning of capital markets, you mentioned it earlier, this creative destruction. This is the essence of capitalism. As awful as this is, I could point to many industries that I thought were over-capacitied. I could point to many industries that I felt were under-capacitied. My particular bias, I’m just going to say indirectly, we were over-entertained, and under taken care of. We had an infrastructure for hospitality and leisure, and we had all kinds of needs in the healthcare sectors that were going unmet. `Obviously, governments have a huge role in that, but to pivot away from over-capacitated industries into areas where there is acute and growing needs, is exactly what a flexible economy is supposed to do. I certainly wish we didn’t have to have something of this magnitude to happen, but there’s an inevitability to a reshuffling of the economic order.

Trevor Chambers:

Yeah. Hey, let’s change to, kind of along the same lines, but can you tell me what velocity of money is? Correct me if I’m wrong, but what happened in a way with the Great Recession, the money got into the financial world but it didn’t make it to Main Street. This time, with stimulus, you have both. Let’s start with velocity of money, and then what do you think? Are we going to see deflation and then inflation, or how does this all play out? What role does velocity of money play in that?

James Camp:

This is a fabulous question, and it’s a thoughtful one, and I’ll go back-

Trevor Chambers:

I’ve got to tell you, I researched it for probably about five minutes.

James Camp:

Okay, well that’s impressive. It’s actually one of my favorite economic topics, and it goes back to 2008.

Trevor Chambers:

I love it. Oh.

James Camp:

It goes back to 2008, and let’s just do a thought experiment.

Trevor Chambers:

Yeah.

James Camp:

Your bank in 2008, you were on the verge of failure. Your balance sheet is full of bad assets. Your stock price has been cut dramatically. You can go to the market and try to issue equity capital to shore up your balance sheet, or you can get the wink and the nod from the Federal Reserve. The wink and the nod is this. The Federal Reserve is going to have interest rates pegged at zero for as long as the eye can see. You can borrow at zero. You can go to the Fed window. You can pay your depositors absolutely nothing. You can then go buy a 10-year treasury bond at two-and-a-half percent.

The wink and the nod from the Fed is saying, “We’ve got this new tool called quantitative easing. We promise you, Mr. Banker, that your 10-year treasury is never going to be underwater, because interest rates are not going up. We are implicitly controlling long-term rates.” You borrow at zero, you buy a risk-free asset at two-and-a-half percent. Is it any wonder that there was no velocity to money in 2008, ’09 and ’10?

Trevor Chambers:

Yeah.

James Camp:

This is a major problem that I had with how we recapitalized the banking system. We did it on the backs of the savers, and to me, it is a thing. Now, having said that, that was the business model that we ended up with. The banks got recapitalized. That’s the good news. They got, perhaps, over-capitalized. Recall, Europe’s never been able to do this experiment. They’ve never been able to recapitalize their banking system. I would call this a stealth tax on favors. Regardless, that’s why there was no velocity to money. That’s why we ‘printed money’. We never had runaway inflation. There we go.

What’s different today? The difference today is with the Main Street lending facility, with the payroll protection plan. These are dollars that don’t pass go, don’t funnel through the banking system, and go directly into checking accounts of consumers. This is a very different economic, and financial velocity model than what we had. The idea is that we can plug a part of the massive consumption hole that COVID-19 brought about. We are going to watch velocity of money closely. I am also watching what I call continuing unemployment claims closely. We know it’s bad. We know the numbers are horrific. How sustainable are they? Are these measures helping? Are people coming back to work?

Near-term, this is a deflationary moment. This is a price-collapsing moment. We saw it in the CPI data yesterday. Ultimately, and ultimately is six months to a year from now, if these measures of fiscal stimulus, of Fed support, and the fact that our economy gets more friction to it… By more friction I mean, are our supply chains going to look the same in a year? Are we going to be, as manufacturing, or other industrial companies, chasing marginal cost around the globe? Are we going to be saying to ourselves, “Maybe we need a little more resiliency. Maybe we need a little more stockpiling.”

All of that, to me, if that doesn’t create some modicum of core inflation, you might as well take your black highlighter, go to your dictionary where it says inflation, cross it out, because it doesn’t exist. I happen to believe we’ll see some. It’s not today’s problem, but at some point, we’re Arthur Fonzarelli jumping the shark with printing money. I don’t know when that day comes, but at some point somebody’s going to show up at the treasury office and say, “We don’t like this.” Then, we’ve got a problem.

Trevor Chambers:

Yeah. You’re a Fonz guy?

James Camp:

Until the shark thing.

Trevor Chambers:

Oh, my God. That was the best show. You and I have got to be tracking each other in ages. I don’t know if Fonzi would like this. I don’t know, but am I smelling more and more MMT in the monetary theory? Am I smelling that bubbling up through the world? Here’s what I hear. We might get to a point where we are cutting people checks for a while, a little more extended. That’s sort of like the first version of MMT. Do you have any thoughts on that?

James Camp:

Absolutely. You hit the nail on the head. The gate’s open. The door is open, and the more progressive-thinking political group, they have an argument. I’m a free market guy, but we’ve been at this for the system for quite some time. This is a real impact to a massive swathe of vulnerable populations in our country. This notion of, “What’s good for the goose is good for the gander,” while I think it is flawed, it’s going to have legs. I’ve posited, and this was just sort of conversational talk with my team, we may end up with a long term unemployment rate. Long term meaning a year, or two, or three, that hovers around that 10% number. We may simply say that there’s going to be a basic income to that group. By the way, that may not be bad.

Trevor Chambers:

Yeah. This is so interesting, isn’t it? Again, it just must be incredible from your vantage point.

James Camp:

You have every facet of American life in play, right?

Trevor Chambers:

Yup.

James Camp:

You have the economic life. You have, obviously, the healthcare and personal concern. You have the infrastructure, and the government response. It encapsulates everything. I will just simply say, I think the Federal Reserve, and to a large extent Congress, has done very good things in very rapid fashion to cure that vacuum that had the potential to be very disastrous for us. I am astounded, and humbled by the standup of the healthcare industry, and the caregivers, and the research and development people. All of the things that I read about, every single day, this is Manhattan Project times three. It astounds me.

Trevor Chambers:

Yeah.

James Camp:

I am astounded by the individual agents, generally. What people are doing for each other. Obviously, we’re all involved in different groups, and nonprofits. My nonprofits that I’m involved in, I just continue to be amazed by. Now, we sure as heck can criticize our institutions. We have that right. We have, frankly, that responsibility. A lot of things about what’s good about the American economic model and the people are showing themselves. I just have hope, and faith in that.

Trevor Chambers:

I couldn’t agree more. I was talking in a conversation with a financial historian in March. To play into your theme, he said, “Japan has been an emerging market, coming out for about 50 years, and China, lets say the last 30. We’ve been emerging for 200 years, and we will continue to emerge.” These are the types of things that are catalysts to changes. We’re built to do these types of things. To figure out new ways to do stuff. Actually, sometimes it makes it easier for entrepreneurs to start their businesses in times like this, when the bandaid gets ripped away.

I know I don’t have you forever, so I’m going to ask you just a couple of other questions. Then, I’m going to let you scamper off and do your thing. First of all, what have we got to work on? What are you most optimistic about? When I say what have we got to work on, what does the country have to work on?

James Camp:

I think the country has to come to grips with one size doesn’t fit all, and understand demographic populations better. Things like comorbidity. I am not an epidemiologist. I’m certainly not a doctor, but I’m a pretty good statistician. It appears to me that our original construct as a country, that we enumerate power to the Feds, and we let the states decide, is an important model right now. I think we’re going to have to continue with this and start to evaluate, you know, do it over again. I think was Harry Truman who said, “We’ll try this, and if it doesn’t work, we’ll try something else,” but we’ve got to try.

I am fully supportive of Phase One level where possible; a reintroduction of economic activity. We have to work on, it seems to me, what sorts of therapeutics are productive when. We have to work on which parts of our population have been most vulnerable for a long time, and what, if anything, can we do near-term for that, and what are the long-term solutions? I’ve heard so many great suggestions coming out of this. For example, and I’m just throwing this out there…

I have a pharmacist at my local drugstore that has a PhD. The play space in TeleMed, for people that don’t have access, or these ideas that we can use, can we test in areas like that? For populations that don’t have direct access to medical care. All of these things. The whole model would get reworked. Education models are getting reworked.

Trevor Chambers:

Yeah.

James Camp:

Again, it’s a moment of creative destruction, a moment of opportunity. It’s also a moment of reveal to me. Not that me, personally, and I’m sure you, Trevor, needed a cold slap in the face to realize that we had issues, but let’s find some solutions this time. Let’s be intellectually honest with each other about the nature of some of these things.

Trevor Chambers:

Yeah. Yeah, technology’s going to play a huge roll in this thing. It’s just so clear. Okay. You just crushed it. Now, I just have two quick questions. I want you to shout out to your charitable organization that you’re into. I want you to tell me what you’re podcasting, reading, or what movies or whatever, okay? Last, a shout-out to your favorite local restaurant down there.

James Camp:

I share with the local United Way. The thing I’m most proud of is our standup on summer reading program. Our summer reading program is for at-risk; those that have massive reading leak over the summer. It’s documented, it’s incredible how far back they go. We were able to get with some commercial providers to provide WiFi into affordable housing areas. We got the summer reading program 100% online. We think we’re actually going to serve more clients this summer than we did with the play space reading program. That’s been really encouraging. That’s been ongoing.

Trevor Chambers:

Good for you guys. Thank you.

James Camp:

Now, obviously, what do I do when I’m streaming, I’m in Florida, so I watch lots of stupid tiger guy. Whatever the heck that was for.

Trevor Chambers:

Oh, my 16-year-old tried to get me into it. I was like, “I don’t know, man.”

James Camp:

Yeah.

Trevor Chambers:

All right.

James Camp:

I lost a few IQ points there. I spend a lot of time with things, but the Economist, I spend a lot of time on the weekends with research that, actually, the economic research right now is medical research. Again, I do not opine that I understand all of this stuff, but I can connect dots, and I want to know where the dots are. I, daily, try to get updates on things that may be happening on that level. From a personal standpoint, I’ve used this opportunity to do a long-overdue dive into my wife’s favorite hobby, which is yoga. I’ve been doing that online.

Trevor Chambers:

Yes.

James Camp:

I am a distance runner, all through my life, and that’s catching up with me at 56 years old. I’m still able to run, but I’ve mixed in the yoga. Shout-out to local restaurant, my favorite-

Trevor Chambers:

You’re downward dogging over there. Is that what’s going on?

James Camp:

It’s not being filmed, but it’s effective.

Trevor Chambers:

It can’t be pretty when we get to our age, but I’ve got to do it. I love it.

I’ve asked all of my team to do one thing new during this period. That can be whatever you want to do, so mine is online yoga.

Good.

James Camp:

Noble Crust, St. Pete, Florida. Great family-owned restaurant, great quality cuisine, great people.

Trevor Chambers:

Okay, so a shout-out to Noble Crust. That’s fabulous. Hey, by the way, any particular economic space podcast that you listen to?

James Camp:

All of them, but the things that I listen to are actually vendors that consult with us, that we work with directly.

Trevor Chambers:

Oh, okay. Interesting. You know what I’m looking for? I’d like to track down a food economist. I’m looking for a food economist.

James Camp:

In terms of what interest level?

Trevor Chambers:

Just to talk to them about what they’re seeing, what they think the future’s going to be. I have a personal interest in it. My family is actually in the restaurant business up here in Raleigh. I’m not part of it anymore, but I was, with my sister-in-law and her husband. I’m pretty deep into that world, and obviously, that whole thing. The supply chain, all of that, has just gotten obviously torn up. I’m interested to talk to somebody in that space.

James Camp:

Let me see if I can find out. I know we cover food distribution.

Trevor Chambers:

Yeah.

James Camp:

The known, the Syscos of the world, and the US Foods of the world. We have analyst coverage on those names. Your longer-tail question is one of great interest, obviously.

Trevor Chambers:

Yeah, huge, and in fact-

James Camp:

It is a longer-term question about supply chain generally, right?

Trevor Chambers:

Exactly.

James Camp:

We’re going to go from just in time, to resilience. We’re going to go from peak efficiency, to peak resilience. I believe that. I believe it has implications for ESG investing. I believe it has implications for global supply chain. I think it’s far-reaching.

Trevor Chambers:

I couldn’t agree more. Just the focus on restaurants for a second, when we tell you about it, people don’t understand. These are little manufacturing facilities all around us. Their cost structure, it’s terrible, and it’s gotten worse, and we have to rethink those manufacturing facilities. Then, as far as supply chains go, yeah, that whole thing’s going to be absolutely amazing to watch. Maybe we can do this. If we can do this again, we can to into depth on that, after we get some perspective on it. Maybe in another three to six months we’ll do another one, and we’ll have reviewed the tape, and see if our predictions are playing out.

James Camp:

I would close with this, Trevor.

Trevor Chambers:

Yeah.

James Camp:

The markets are recovering better than the real economy. The two can not be separate forever. All of the conservative things that you preach, and we preach, it’s lovely that the S&P is only off whatever it’s off year-to-date. It is masking some things, and it’s breadth is narrow. There are risks out there. We are not out of the woods, by a long shot. We have a lot of curative things in place. We are beginning to mobilize rapidly. I don’t believe financial markets will test the bottom, because I thought that was a de-leveraging moment. We’re going to move with some volatility here through these next few quarters. With that, flexibility, the asset allocations, conversation, educating yourself, and staying on plan, is absolutely the most important thing you can do for your financial health.

Trevor Chambers:

I could not have said it better. Really, that’s fabulous. That’s what we believe. Well, my man… Hey, so you grew up in Maryland? You have some crab sandwiches, and crab everything up there. I love that food up there.

James Camp:

Annapolis, Maryland.

Trevor Chambers:

Oh, my God. I don’t think there’s anything better than a beer, and just a big table full of crab that you just crush in with your friends. That’s got to be… You’re in a good spot down there in Tampa for seafood, for sure.

James Camp:

We’ve got great fresh catch down here.

Trevor Chambers:

Yeah, it’s awesome. I love it down there. Well, Mr. Camp, thank you so much for your time. I really do appreciate it. If we could do this again sometime, I’d love to do it. Please, give my best to your family. How’s the living with the family situation?

James Camp:

Everybody’s doing wonderful.

Trevor Chambers:

Good, all right.

James Camp:

They’re beyond resilient. My wife is a steady hand. She keeps the ship righted. We’re very fortunate, and we know that, so we’re grateful.

Trevor Chambers:

You’ve been working out of the house for most of this, or what’s going on?

James Camp:

About half-and-half.

Trevor Chambers:

About half-and-half.

James Camp:

I go in, in the mornings, since my kids are online schooling. My daughter is matriculating up in North Carolina for college next year, the Lord willing.

Trevor Chambers:

Oh, cool. Where’s she going to go?

James Camp:

She’s going to the EY, over in Greensboro.

Trevor Chambers:

Oh, yeah. Great school. Just down the road from us. Oh, so you might be visiting.

James Camp:

I will be visiting quite a bit, if I’m-

Trevor Chambers:

Awesome. Well, maybe we’ll catch you on one of those visits or whatever. That would be great, in person. Well, listen, James…

James Camp:

We’ll do that.

Trevor Chambers:

… thanks so much for the time, I appreciate it. Stay safe, and we will stay in touch and maybe do this again.

James Camp:

Likewise, thanks everybody.

Trevor Chambers:

Thank you, sir. See you soon. Yeah, bye-bye.

James Camp:

Yeah, of course. Bye-bye.