1 00:00:00,120 --> 00:00:04,360 Speaker 1: Bloomberg is now on your dashboard with Apple CarPlay and 2 00:00:04,360 --> 00:00:08,160 Speaker 1: Android Auto. It gives you access to every Bloomberg podcast, 3 00:00:08,280 --> 00:00:11,560 Speaker 1: live audio feeds from Bloomberg Radio, print stories from Bloomberg 4 00:00:11,640 --> 00:00:14,920 Speaker 1: News in audio form, and the latest headlines of the 5 00:00:14,920 --> 00:00:18,600 Speaker 1: click of a button with Bloomberg News. Now it's free 6 00:00:18,680 --> 00:00:21,439 Speaker 1: with the latest version of the Bloomberg Business App. That's 7 00:00:21,680 --> 00:00:24,400 Speaker 1: the Bloomberg Business App. Get it on your phone in 8 00:00:24,440 --> 00:00:27,760 Speaker 1: the Apple App Store or on Google Play. Just download 9 00:00:27,800 --> 00:00:30,560 Speaker 1: the app, connect your phone to your car and get started. 10 00:00:30,960 --> 00:00:34,400 Speaker 1: And it's all presented by our sponsor, Interactive Brokers. 11 00:00:35,400 --> 00:00:38,600 Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 12 00:00:38,640 --> 00:00:39,800 Speaker 2: my co host Matt Miller. 13 00:00:40,200 --> 00:00:44,279 Speaker 1: Every business day we bring you interviews from CEOs, market pros, 14 00:00:44,320 --> 00:00:48,160 Speaker 1: and Bloomberg experts, along with essential market movin news. 15 00:00:48,720 --> 00:00:51,839 Speaker 2: Find the Bloomberg Markets podcast called Apple Podcasts or wherever 16 00:00:51,960 --> 00:00:55,880 Speaker 2: you listen to podcasts, and at Bloomberg dot Com slash podcast. Again, 17 00:00:55,920 --> 00:00:59,000 Speaker 2: it feels like this market is just really has it 18 00:00:59,080 --> 00:01:01,600 Speaker 2: gotten too far over? That's what it feels like to me, 19 00:01:01,640 --> 00:01:03,240 Speaker 2: at least in the short term. But what do I know. 20 00:01:03,920 --> 00:01:06,120 Speaker 2: I've only been doing this since nineteen eighty six. I 21 00:01:06,200 --> 00:01:08,720 Speaker 2: still don't get it. Robert Teetert, he knows what's going on. 22 00:01:08,800 --> 00:01:10,720 Speaker 2: He's a head of investment policy in a strategy group 23 00:01:10,720 --> 00:01:13,440 Speaker 2: at silver Cress Asset Management. Robert, does it feel like 24 00:01:13,480 --> 00:01:16,039 Speaker 2: we're a little ahead of ourselves here based upon what 25 00:01:16,040 --> 00:01:17,839 Speaker 2: we heard from FED Chairman J Powell last week? 26 00:01:18,080 --> 00:01:18,440 Speaker 3: It does. 27 00:01:18,480 --> 00:01:20,400 Speaker 4: We've gotten a lot of progress in the last six 28 00:01:20,440 --> 00:01:22,640 Speaker 4: weeks as we've seen the yield and the tenure come 29 00:01:22,640 --> 00:01:24,600 Speaker 4: down from five to four. We've added a lot on 30 00:01:24,640 --> 00:01:27,960 Speaker 4: the valuation side. Seems like we're fairly valued here rather 31 00:01:28,360 --> 00:01:31,240 Speaker 4: than undervalued. Need a lot of progress next year on 32 00:01:31,280 --> 00:01:34,480 Speaker 4: inflation and FED talk to keep holding those gains in valuation. 33 00:01:34,680 --> 00:01:36,319 Speaker 4: So I think we're sort of at the end of 34 00:01:36,360 --> 00:01:38,639 Speaker 4: this phase of the of the FED rate cut cycle 35 00:01:38,760 --> 00:01:40,880 Speaker 4: or FRED rate cycle. Exc you get me flipping from 36 00:01:40,920 --> 00:01:44,360 Speaker 4: ice to cuts and there I am getting ahead of myself. 37 00:01:44,120 --> 00:01:48,320 Speaker 5: Right right, So how are you advising your clients to 38 00:01:48,480 --> 00:01:50,880 Speaker 5: position heading into next year? Because you were mentioning to 39 00:01:50,920 --> 00:01:53,600 Speaker 5: me earlier that you felt like what is transpired in 40 00:01:53,680 --> 00:01:55,800 Speaker 5: the past seven weeks you were thinking was going to 41 00:01:55,800 --> 00:01:57,559 Speaker 5: actually take about six months to happen. 42 00:01:57,800 --> 00:01:59,560 Speaker 4: Yes, I do think it makes next year a bit 43 00:01:59,600 --> 00:02:02,160 Speaker 4: more allenging. We've compressed a lot of gains into a 44 00:02:02,200 --> 00:02:05,000 Speaker 4: short period of time. The earnings picture still looks reasonably 45 00:02:05,120 --> 00:02:07,320 Speaker 4: encouraging for next year. So while the streets at plus 46 00:02:07,320 --> 00:02:09,840 Speaker 4: eleven or so, my forecast is for around six percent 47 00:02:09,880 --> 00:02:12,120 Speaker 4: on the earning side, I'm not really looking for any 48 00:02:12,160 --> 00:02:14,680 Speaker 4: valuation progress next year. We've had that in the last 49 00:02:14,760 --> 00:02:17,280 Speaker 4: six weeks and that probably isn't going to happen next 50 00:02:17,360 --> 00:02:19,440 Speaker 4: year now, But that still sets the stage for a 51 00:02:19,440 --> 00:02:22,840 Speaker 4: pretty decent year of midsignal digit returns driven mainly by valuation, 52 00:02:23,200 --> 00:02:24,720 Speaker 4: And maybe when we get to the end of the year, 53 00:02:24,760 --> 00:02:27,080 Speaker 4: we're starting to be into the fed cycle and can 54 00:02:27,080 --> 00:02:29,000 Speaker 4: get a little more clarity on the outlook beyond that. 55 00:02:29,400 --> 00:02:31,560 Speaker 2: Now, Jess, she won't admit to it, but she's owned 56 00:02:31,560 --> 00:02:34,480 Speaker 2: the Magnificent seven. She's belong those stocks, so she says, 57 00:02:34,560 --> 00:02:36,320 Speaker 2: you know, going right to the bank. Me, on the 58 00:02:36,320 --> 00:02:38,600 Speaker 2: other hand, I have not What do I do here? 59 00:02:38,600 --> 00:02:40,680 Speaker 2: Do I chase them into twenty twenty four? Do I 60 00:02:40,720 --> 00:02:43,840 Speaker 2: try to find some of the sectors that have not performed? 61 00:02:44,160 --> 00:02:45,959 Speaker 2: How do you think about where to go in twenty four? 62 00:02:46,320 --> 00:02:49,120 Speaker 4: The likely scenario in my mind is that the seven 63 00:02:49,200 --> 00:02:52,239 Speaker 4: still continue to keep pace, driven mainly by the earning side. 64 00:02:52,280 --> 00:02:55,800 Speaker 4: They've got strong earnings potential that should continue. But small 65 00:02:55,800 --> 00:02:58,280 Speaker 4: caps will catch up. They've been out of favor for 66 00:02:58,360 --> 00:03:01,400 Speaker 4: a long time. There's a lot of valuation pressure that's 67 00:03:01,400 --> 00:03:03,280 Speaker 4: closed the gap a bit in the last six weeks, 68 00:03:03,280 --> 00:03:05,440 Speaker 4: but I think still more room to go. There are 69 00:03:05,440 --> 00:03:07,200 Speaker 4: a lot of segments within small cap two that have 70 00:03:07,240 --> 00:03:09,280 Speaker 4: been pressured a lot by the rate cycle. So as 71 00:03:09,320 --> 00:03:11,800 Speaker 4: you have an easy rate environment, some of the finance 72 00:03:11,800 --> 00:03:14,040 Speaker 4: and concerns are taken off of the table there. That's 73 00:03:14,080 --> 00:03:16,359 Speaker 4: probably beneficial for margins and the small cap side to 74 00:03:16,480 --> 00:03:18,360 Speaker 4: tend to carry a bit more debt. So I'm not 75 00:03:18,400 --> 00:03:21,360 Speaker 4: really afraid of the seven here. They'll continue to carry 76 00:03:21,360 --> 00:03:23,360 Speaker 4: their own on earnings, but the rest of the market 77 00:03:23,360 --> 00:03:27,880 Speaker 4: will catch up a bit more. How do you view financials, Yes, 78 00:03:27,960 --> 00:03:30,320 Speaker 4: that's an interesting and challenging sector, but I think the 79 00:03:30,360 --> 00:03:31,680 Speaker 4: same as the small cap space. 80 00:03:31,960 --> 00:03:35,240 Speaker 5: Well, it's also very broad because you have the bigger banks, 81 00:03:35,280 --> 00:03:38,040 Speaker 5: you have insurers, and then you also had fintech in 82 00:03:38,080 --> 00:03:41,520 Speaker 5: it that was not originally in that sector but got 83 00:03:41,560 --> 00:03:43,680 Speaker 5: moved over because of the GIGS changes in the spring. 84 00:03:43,800 --> 00:03:46,640 Speaker 4: Yeah, I think a lot of that nuance will be 85 00:03:46,720 --> 00:03:49,600 Speaker 4: super interesting next year. We've had this easy knee jerk 86 00:03:49,680 --> 00:03:53,360 Speaker 4: reaction of lower rates good for everybody, especially good for financials, 87 00:03:53,600 --> 00:03:55,680 Speaker 4: And in my mind, the story of twenty twenty four 88 00:03:55,800 --> 00:03:58,080 Speaker 4: is going to be a stock picking story, a nuanced 89 00:03:58,160 --> 00:04:00,920 Speaker 4: story of not just sectors, but industry groups, and not 90 00:04:00,960 --> 00:04:03,400 Speaker 4: even just industry groups, but individual companies and how they're 91 00:04:03,440 --> 00:04:06,680 Speaker 4: navigating the challenges of a slower growth environment, which frankly 92 00:04:06,760 --> 00:04:08,040 Speaker 4: is in front of us, so they have to be 93 00:04:08,040 --> 00:04:09,440 Speaker 4: paying attention to margins. 94 00:04:09,880 --> 00:04:12,680 Speaker 2: How about energy here, we've seen a lot of volatility 95 00:04:12,880 --> 00:04:16,919 Speaker 2: in the price of crude oil across the globe, supply demand, 96 00:04:17,040 --> 00:04:20,320 Speaker 2: all the geopolitical issues here. Is that a space that 97 00:04:20,520 --> 00:04:23,000 Speaker 2: you like into twenty twenty four or is that kind 98 00:04:23,000 --> 00:04:25,320 Speaker 2: of had its run because it's been a sector that 99 00:04:25,600 --> 00:04:27,680 Speaker 2: everybody forgot about for a decade, it seemed like, and 100 00:04:27,720 --> 00:04:29,880 Speaker 2: then it's just been really performing well over the last 101 00:04:29,880 --> 00:04:30,480 Speaker 2: couple of years. 102 00:04:30,640 --> 00:04:33,479 Speaker 4: It has been It's hard to see an environment where 103 00:04:33,560 --> 00:04:36,599 Speaker 4: those prices continue a lot higher, absent more geopolitical risk, 104 00:04:36,640 --> 00:04:39,640 Speaker 4: again just on the basis of a slowing economy. So globally, 105 00:04:39,680 --> 00:04:41,760 Speaker 4: you know, Asia had been a real powerhouse of growth 106 00:04:41,760 --> 00:04:44,800 Speaker 4: that slowed down US. They'd had a massive rebound, of 107 00:04:44,800 --> 00:04:47,160 Speaker 4: course in terms of growth, but next year, with a 108 00:04:47,200 --> 00:04:50,200 Speaker 4: backdrop of probably two percent economic growth, hard to see 109 00:04:50,200 --> 00:04:52,400 Speaker 4: a lot of upside pressure on commodities next year. 110 00:04:52,480 --> 00:04:54,400 Speaker 5: How are your clients feeling right now? 111 00:04:55,600 --> 00:04:58,320 Speaker 4: I think they, like most of the rest of the world, 112 00:04:58,360 --> 00:05:01,240 Speaker 4: are feeling a bit surprised how quickly the last six 113 00:05:01,279 --> 00:05:03,480 Speaker 4: weeks unfolded. You know, it was sort of very easy 114 00:05:03,600 --> 00:05:05,680 Speaker 4: back in October to look at the year and say, 115 00:05:05,880 --> 00:05:07,560 Speaker 4: it's been an okay year, but there are a lot 116 00:05:07,600 --> 00:05:09,560 Speaker 4: of things that have been lagging, and a lot's. 117 00:05:09,279 --> 00:05:13,560 Speaker 5: Happened from the past six seven weeks, I don't think. 118 00:05:13,680 --> 00:05:15,479 Speaker 4: So we've done a pretty good job, I think of 119 00:05:15,560 --> 00:05:18,520 Speaker 4: keeping clients invested, and our view for most of this 120 00:05:18,680 --> 00:05:21,279 Speaker 4: year had been relatively optimistic, so we hadn't been in 121 00:05:21,279 --> 00:05:23,520 Speaker 4: the Barish camp. We had been in the optimistic camp 122 00:05:23,560 --> 00:05:25,480 Speaker 4: on the year on the basis of the progress that's 123 00:05:25,520 --> 00:05:28,279 Speaker 4: been made in inflation and economy. Mainly on the economy. 124 00:05:28,279 --> 00:05:30,239 Speaker 4: You know, a lot of folks had a really strong 125 00:05:30,520 --> 00:05:33,760 Speaker 4: recessionary bias and we have not had that, and so 126 00:05:33,800 --> 00:05:36,320 Speaker 4: I think for the most part, we've kept a pretty steady, 127 00:05:36,400 --> 00:05:38,720 Speaker 4: steady course through the year and not feeling like we're 128 00:05:38,760 --> 00:05:39,719 Speaker 4: missing out on anything. 129 00:05:39,839 --> 00:05:43,039 Speaker 5: How do you view the trajectory of the economy next year. 130 00:05:43,960 --> 00:05:47,200 Speaker 4: Definitely slowing. I'm not in the recession camp mainly on 131 00:05:47,200 --> 00:05:49,360 Speaker 4: the basis that I think we'll I think we'll see 132 00:05:49,400 --> 00:05:51,640 Speaker 4: it coming. And that sounds like very dangerous words, but 133 00:05:51,960 --> 00:05:54,039 Speaker 4: with the availability of real time data that we have 134 00:05:54,160 --> 00:05:56,600 Speaker 4: and the fact that we're still adding jobs in the economy, 135 00:05:57,160 --> 00:05:59,440 Speaker 4: that means economic growth. And we can debate a lot 136 00:05:59,480 --> 00:06:02,160 Speaker 4: whether that's half a percent or two percent, but it 137 00:06:02,240 --> 00:06:04,200 Speaker 4: is still growth. And I think until we start seeing 138 00:06:04,200 --> 00:06:07,800 Speaker 4: some signals that economic activities turning negative, we're in a 139 00:06:07,839 --> 00:06:08,320 Speaker 4: slow growth. 140 00:06:08,360 --> 00:06:10,320 Speaker 5: What are some of your favorite signals that you like 141 00:06:10,400 --> 00:06:12,200 Speaker 5: to gauge, because I feel like there's sort of the 142 00:06:12,240 --> 00:06:14,479 Speaker 5: telltale signs that Wall Street likes to look at. But 143 00:06:14,520 --> 00:06:16,000 Speaker 5: what do you like to use from more of an 144 00:06:16,040 --> 00:06:19,480 Speaker 5: investment perspective, maybe contrarian perspective too, to see if certain 145 00:06:19,480 --> 00:06:21,520 Speaker 5: things are weakening where you start loading up on stocks. 146 00:06:21,720 --> 00:06:23,520 Speaker 4: Yeah, that's a great question. We look a lot at 147 00:06:23,560 --> 00:06:25,360 Speaker 4: We do a lot of factor work. We do a 148 00:06:25,360 --> 00:06:28,359 Speaker 4: lot of work on spreads between sectors and attribution and 149 00:06:28,400 --> 00:06:30,880 Speaker 4: then tying that to where we are in the economic cycle, 150 00:06:31,000 --> 00:06:33,359 Speaker 4: So just looking at rates of change on different indicators 151 00:06:33,400 --> 00:06:36,000 Speaker 4: on the economy, both real time and jobs growth, and 152 00:06:36,320 --> 00:06:38,800 Speaker 4: basically trying to link those two pieces together. So our 153 00:06:38,839 --> 00:06:42,159 Speaker 4: story for twenty twenty three had been avoiding recession and 154 00:06:42,200 --> 00:06:43,800 Speaker 4: we thought that would be good for earnings, and that's 155 00:06:43,839 --> 00:06:46,120 Speaker 4: buying large played out, and the story for next year 156 00:06:46,200 --> 00:06:47,400 Speaker 4: is sort of more of the same but at a 157 00:06:47,480 --> 00:06:51,080 Speaker 4: much smaller level. No recession, very slow earnings growth and 158 00:06:51,160 --> 00:06:52,840 Speaker 4: eking out mid single digit gains and. 159 00:06:52,800 --> 00:06:56,400 Speaker 2: Earnings about outside the US. Any opportunities there for you guys, 160 00:06:56,880 --> 00:06:58,599 Speaker 2: it's been a really tough area. 161 00:06:58,720 --> 00:07:00,520 Speaker 4: You know, every time we and other look at it, 162 00:07:00,560 --> 00:07:04,440 Speaker 4: there's that nice looking valuation gap that never seems to close. 163 00:07:04,800 --> 00:07:06,680 Speaker 4: And the challenge there, I think is growth. You know, 164 00:07:06,720 --> 00:07:09,680 Speaker 4: Asia growth has been slowing. Europe's had a really tough 165 00:07:09,720 --> 00:07:12,760 Speaker 4: time generating growth. The sectors that are that are growth 166 00:07:12,800 --> 00:07:16,440 Speaker 4: oriented in terms of generating organic earnings are really in 167 00:07:16,480 --> 00:07:18,960 Speaker 4: the US, and so it's very hard to get excited 168 00:07:19,000 --> 00:07:21,480 Speaker 4: about those areas. There are, of course, great companies that 169 00:07:21,560 --> 00:07:24,280 Speaker 4: are very undervalued because they're based overseas, So there are 170 00:07:24,360 --> 00:07:27,560 Speaker 4: some selective opportunities but more of a stock picking opportunity 171 00:07:27,640 --> 00:07:29,760 Speaker 4: rather than a broad based international play. 172 00:07:29,840 --> 00:07:31,440 Speaker 2: All right, Robert, thanks so much for joining us. Really 173 00:07:31,480 --> 00:07:34,679 Speaker 2: appreciate it as always, Robert Teeter. He's head of investment 174 00:07:34,720 --> 00:07:39,480 Speaker 2: Policy and a strategy strategy group at Silvercress Asset Management. 175 00:07:39,880 --> 00:07:42,400 Speaker 2: Looking at these markets holding on to some modest gains 176 00:07:42,440 --> 00:07:44,200 Speaker 2: here the S and P five hundreds up about four 177 00:07:44,240 --> 00:07:46,720 Speaker 2: tens a one percent, of Dow up a half a percent, 178 00:07:47,200 --> 00:07:51,240 Speaker 2: Russell up one point five percent. So that's better breadth. Right, 179 00:07:51,480 --> 00:07:55,520 Speaker 2: as the technicians like to say, you're listening to the team. 180 00:07:55,880 --> 00:07:59,600 Speaker 6: Ken's are Live program Bloomberg Markets weekdays at ten am Eastern, 181 00:08:00,080 --> 00:08:03,840 Speaker 6: Bloomberg dot Com, the iHeartRadio app and the Bloomberg Business app, 182 00:08:04,040 --> 00:08:06,560 Speaker 6: or listen on demand wherever you get your podcasts. 183 00:08:08,360 --> 00:08:11,640 Speaker 2: Let's love transports, all right. I'm not a big podcast guy, 184 00:08:11,920 --> 00:08:15,000 Speaker 2: but I actually do subscribe to this thing called Talking Transports. 185 00:08:15,120 --> 00:08:17,920 Speaker 2: Lee Klascal from Bloemberg Intelligence, He's got it because I mean, 186 00:08:18,600 --> 00:08:21,160 Speaker 2: when you got one entitled werner on better trucking conditions 187 00:08:21,200 --> 00:08:23,360 Speaker 2: in twenty twenty four, Boom, I hit that. Yeah, I 188 00:08:23,440 --> 00:08:25,640 Speaker 2: care about the truckers, I care about the railroads, the 189 00:08:25,680 --> 00:08:28,840 Speaker 2: ocean stuff, it's it's a I used to cover those companies, 190 00:08:28,840 --> 00:08:30,960 Speaker 2: but b they give you a great insight into the 191 00:08:31,800 --> 00:08:34,800 Speaker 2: Lee Clasical joins us here in our Bloomberg interactor broker's studio. 192 00:08:35,559 --> 00:08:37,439 Speaker 2: He's been covering the transports for a long time. He 193 00:08:37,440 --> 00:08:39,800 Speaker 2: does that for Bloomberg Intelligence. Now, Lee, I want to 194 00:08:39,840 --> 00:08:44,040 Speaker 2: start with FedEx. Man, that stock is ripping up sixty 195 00:08:44,040 --> 00:08:46,600 Speaker 2: two year to date. They're gonna report numbers after the close. 196 00:08:47,160 --> 00:08:48,040 Speaker 2: What do you expect to hear? 197 00:08:49,280 --> 00:08:51,440 Speaker 7: You know what we expect to hear is share gains. 198 00:08:51,480 --> 00:08:54,520 Speaker 7: So there won some share gains from UPS. As you 199 00:08:54,559 --> 00:08:57,760 Speaker 7: should probably remember UPS at a labor contract negotiation that 200 00:08:57,800 --> 00:09:01,160 Speaker 7: went down to the wire and UH shippers diverted their 201 00:09:01,200 --> 00:09:03,640 Speaker 7: freight away from UPS. And FedEx was a big winner 202 00:09:03,760 --> 00:09:06,640 Speaker 7: in that. They're also one share from Yellow. Yellow is 203 00:09:07,880 --> 00:09:11,360 Speaker 7: back in the day in your transportation today. Yeah, they 204 00:09:11,400 --> 00:09:15,320 Speaker 7: were a large lesson truckload provider. They shipped about fifty 205 00:09:15,400 --> 00:09:17,640 Speaker 7: thousand shipments a day, so they had about. 206 00:09:17,400 --> 00:09:19,319 Speaker 8: Six to seven percent of the market and they poof 207 00:09:19,400 --> 00:09:19,880 Speaker 8: went away. 208 00:09:20,400 --> 00:09:22,920 Speaker 7: So that's a lot of a lot of Paletts that 209 00:09:23,000 --> 00:09:26,080 Speaker 7: went up for grabs and FedEx. FedEx Freight is the 210 00:09:26,160 --> 00:09:28,920 Speaker 7: largest LTL carrier in North America, so they were able 211 00:09:28,920 --> 00:09:29,360 Speaker 7: to benefit. 212 00:09:29,480 --> 00:09:30,079 Speaker 2: I didn't know that. 213 00:09:30,600 --> 00:09:34,319 Speaker 5: So when you're looking at FedEx, LTL means LTL. 214 00:09:34,400 --> 00:09:39,560 Speaker 2: Less than truckload. Yeah, as opposed to Tel, which is 215 00:09:39,559 --> 00:09:42,000 Speaker 2: not team leader. It's truckload team leaders. 216 00:09:42,120 --> 00:09:43,520 Speaker 7: And Paul, if you want to learn more about it, 217 00:09:43,520 --> 00:09:46,520 Speaker 7: we actually we have a new podcast today, you do 218 00:09:46,640 --> 00:09:48,160 Speaker 7: with the CEO from ARC Best. 219 00:09:48,480 --> 00:09:50,600 Speaker 2: ARC Best celebrated centennial. 220 00:09:50,960 --> 00:09:52,560 Speaker 8: They did Happy Birthday arc Best. 221 00:09:52,600 --> 00:09:54,360 Speaker 2: Yeah, very cool. So and so ARC Best are they 222 00:09:54,360 --> 00:09:56,960 Speaker 2: sort of their private trucking company LTL trucking company their 223 00:09:56,960 --> 00:09:59,440 Speaker 2: public The problem a ARC b Oh, I didn't do 224 00:09:59,440 --> 00:10:01,840 Speaker 2: that deal? Did they get public? I took all those 225 00:10:02,160 --> 00:10:03,600 Speaker 2: public back in the day they. 226 00:10:03,480 --> 00:10:05,960 Speaker 7: Were public, and then they a while ago they had 227 00:10:05,960 --> 00:10:08,439 Speaker 7: some activists investor and then they took themselves private and 228 00:10:08,440 --> 00:10:09,360 Speaker 7: they went public again. 229 00:10:09,800 --> 00:10:12,040 Speaker 2: Fort Smith, Arkansas. That's where I went when I was 230 00:10:12,040 --> 00:10:14,839 Speaker 2: doing this truck Really, God, what do we do with 231 00:10:14,920 --> 00:10:17,520 Speaker 2: the heart land? I don't know, des moines I or something. 232 00:10:17,559 --> 00:10:19,640 Speaker 5: Oh yeah, yea yeah, that sounds like it's awesome. Sounds 233 00:10:19,640 --> 00:10:22,920 Speaker 5: about right. Looking at the Dow transports from their October 234 00:10:22,960 --> 00:10:25,880 Speaker 5: low up close to twenty percent, when you're thinking about 235 00:10:26,360 --> 00:10:28,560 Speaker 5: we will hear like you, we're talking about FedEx after 236 00:10:28,559 --> 00:10:31,240 Speaker 5: the bell today, but when it comes to these transport companies, 237 00:10:31,280 --> 00:10:33,319 Speaker 5: what are they telling us about the economy. 238 00:10:34,240 --> 00:10:35,280 Speaker 8: That's that's a good question. 239 00:10:35,400 --> 00:10:37,640 Speaker 7: So we've been in a freight recession for quite some 240 00:10:37,760 --> 00:10:40,760 Speaker 7: time and we're coming out of that freight recession. The 241 00:10:40,880 --> 00:10:44,200 Speaker 7: less than truckload mark is actually negative right now. And 242 00:10:44,240 --> 00:10:45,559 Speaker 7: one of the good things about when we were talking 243 00:10:45,559 --> 00:10:48,120 Speaker 7: about FedEx earlier, why it's a good thing that they 244 00:10:48,120 --> 00:10:50,280 Speaker 7: got all this market share from Yellow and it comes 245 00:10:50,280 --> 00:10:53,200 Speaker 7: at a time when volumes were down because demand has 246 00:10:53,240 --> 00:10:55,600 Speaker 7: been down, so they've been able to mitigate that impact. 247 00:10:56,320 --> 00:10:58,680 Speaker 7: But you know, what we're seeing is from our vantage 248 00:10:58,720 --> 00:11:01,400 Speaker 7: point and conversations that we have in our channel checks, 249 00:11:01,800 --> 00:11:04,760 Speaker 7: is that you know, in the truckload market, we seem 250 00:11:04,840 --> 00:11:08,240 Speaker 7: to be at the bottom, we're bouncing along the bottom, 251 00:11:08,559 --> 00:11:12,960 Speaker 7: and demand is poised to do better next year, not great, 252 00:11:13,160 --> 00:11:16,160 Speaker 7: but better, uh, And we could see some growth. And 253 00:11:16,240 --> 00:11:19,440 Speaker 7: you know, we expect growth from the rails railroads, whether 254 00:11:19,480 --> 00:11:22,720 Speaker 7: it's commodities or intermodal volumes in the mid single digit 255 00:11:22,800 --> 00:11:27,000 Speaker 7: next year. We expect truckload volume growth in the low 256 00:11:27,040 --> 00:11:28,240 Speaker 7: single digits next year. 257 00:11:28,360 --> 00:11:31,600 Speaker 2: So that's not that's not recessionary data from your transportation. 258 00:11:32,120 --> 00:11:35,000 Speaker 7: So I think what we're doing is we're reflecting positively 259 00:11:35,360 --> 00:11:37,839 Speaker 7: on a lot of these industries because like we've been 260 00:11:37,920 --> 00:11:39,520 Speaker 7: down for a while, and some of that has to 261 00:11:39,520 --> 00:11:41,080 Speaker 7: do with the economy and someone has to do with 262 00:11:41,160 --> 00:11:42,960 Speaker 7: really difficult comparisons. 263 00:11:42,559 --> 00:11:44,920 Speaker 2: Right because everybody was stocking up like crazy back. 264 00:11:44,720 --> 00:11:47,880 Speaker 7: In Beta, okay, and the destocking cycle appears to be 265 00:11:47,960 --> 00:11:50,400 Speaker 7: over from a lot of the retailers, which is really 266 00:11:50,440 --> 00:11:51,679 Speaker 7: good for the truckload market. 267 00:11:52,120 --> 00:11:54,240 Speaker 2: So I mean, I look at FedEx again, up sixty 268 00:11:54,280 --> 00:11:59,319 Speaker 2: two percent, but ups down seven percent? Is that reflective 269 00:11:59,320 --> 00:12:01,320 Speaker 2: of just they're operating? 270 00:12:01,800 --> 00:12:04,080 Speaker 5: Also the strikes strikes? 271 00:12:04,160 --> 00:12:06,560 Speaker 7: Yeah, so so what you see there? So you know, 272 00:12:06,600 --> 00:12:08,960 Speaker 7: it's all about, you know, your two points from a 273 00:12:09,000 --> 00:12:11,800 Speaker 7: performance standpoint, and this year it's a little bit about 274 00:12:12,320 --> 00:12:15,520 Speaker 7: you know, ups dealing with their labor contract issues and 275 00:12:15,559 --> 00:12:20,640 Speaker 7: FedEx kind of getting hammered last year and coming off 276 00:12:20,720 --> 00:12:26,000 Speaker 7: their lows, they've initiated a bunch of new strategies. They 277 00:12:26,000 --> 00:12:28,840 Speaker 7: call it Network two point oh, their Drive initiative. It's 278 00:12:28,880 --> 00:12:33,040 Speaker 7: supposed to say about six billion dollars. They're really FedEx 279 00:12:33,040 --> 00:12:35,760 Speaker 7: became a fat company and they're trimming the fat right now, 280 00:12:35,880 --> 00:12:38,240 Speaker 7: and they're also looking at ways that they never really 281 00:12:38,320 --> 00:12:41,400 Speaker 7: looked at before, like combining their ground and express networks. 282 00:12:41,760 --> 00:12:44,480 Speaker 7: It's going to take time, it's gonna be messy, it's 283 00:12:44,520 --> 00:12:47,840 Speaker 7: gonna be lumpy, if you will, But you know, I 284 00:12:47,840 --> 00:12:51,160 Speaker 7: think the market is actually starting to believe that management 285 00:12:51,200 --> 00:12:52,400 Speaker 7: can finally execute. 286 00:12:52,920 --> 00:12:55,720 Speaker 5: How did the what's going on in the Red Sea 287 00:12:55,880 --> 00:12:58,760 Speaker 5: and it comes to shipping, how do you foresee that 288 00:12:58,920 --> 00:13:00,640 Speaker 5: affecting transport companies? 289 00:13:00,880 --> 00:13:03,520 Speaker 7: Yeah, so it's just another kind of shock to the 290 00:13:03,559 --> 00:13:06,960 Speaker 7: supply chain. We've seen container liner rates which are down 291 00:13:07,000 --> 00:13:08,640 Speaker 7: twenty nine percent from last year. 292 00:13:08,840 --> 00:13:10,920 Speaker 8: They're up ten percent over the last two weeks. 293 00:13:11,360 --> 00:13:14,000 Speaker 7: And that's really driven on that because at the end 294 00:13:14,000 --> 00:13:15,920 Speaker 7: of the day, if a ship can't go through the 295 00:13:15,920 --> 00:13:17,079 Speaker 7: Suez Canal, it's got to. 296 00:13:17,000 --> 00:13:18,880 Speaker 8: Go south along Africa. 297 00:13:19,559 --> 00:13:22,160 Speaker 7: It adds about ten to twelve days, and so that 298 00:13:22,520 --> 00:13:24,880 Speaker 7: you know, time is money, So it's going to add 299 00:13:24,920 --> 00:13:28,400 Speaker 7: costs to shippers and listen, it's going to be inflationary. 300 00:13:29,120 --> 00:13:32,640 Speaker 7: But that inflationary pressure I'm not gonna say transitory because 301 00:13:32,679 --> 00:13:35,120 Speaker 7: I think someone will trouble for that, but it's definitely 302 00:13:35,160 --> 00:13:37,040 Speaker 7: going to be short term in nature because the US 303 00:13:37,160 --> 00:13:39,920 Speaker 7: government is and its allies they have. 304 00:13:39,880 --> 00:13:42,760 Speaker 8: A coalition to deal with the houthy rebels. 305 00:13:43,520 --> 00:13:47,600 Speaker 7: And you know, it might not create the most fluid 306 00:13:47,640 --> 00:13:49,880 Speaker 7: supply chains because you know, ships might have to operate 307 00:13:49,920 --> 00:13:51,320 Speaker 7: in a convoy if you will. 308 00:13:51,400 --> 00:13:51,679 Speaker 2: Wow. 309 00:13:52,280 --> 00:13:53,160 Speaker 8: But but it'll be. 310 00:13:54,120 --> 00:13:58,240 Speaker 7: Safer for ships to transverse the traversity of the Red Sea. 311 00:13:58,400 --> 00:13:59,880 Speaker 2: I do even quite frankly, have to be honest, I 312 00:14:00,080 --> 00:14:02,120 Speaker 2: need to know where the Red Sea was a couple 313 00:14:02,120 --> 00:14:03,040 Speaker 2: of days ago, and I had to go. 314 00:14:03,200 --> 00:14:06,280 Speaker 5: Like Google map it and air you thought it was. 315 00:14:06,559 --> 00:14:10,959 Speaker 2: It's Jerry Garcia on it. I thought that until very 316 00:14:10,960 --> 00:14:14,480 Speaker 2: recently in my adult life. So but I mean twelve 317 00:14:14,520 --> 00:14:16,960 Speaker 2: percent of you of global shipping goes through the Red Sea, 318 00:14:17,120 --> 00:14:19,560 Speaker 2: so I mean that's marish. Those are the companies you cover, right, 319 00:14:19,600 --> 00:14:20,480 Speaker 2: the big Yeah. 320 00:14:20,360 --> 00:14:22,720 Speaker 7: So a lot of a lot of the liners like Maris, Capac, Lloyd, 321 00:14:22,920 --> 00:14:26,400 Speaker 7: the two private ones MSc and CMA, they all announced 322 00:14:26,400 --> 00:14:28,920 Speaker 7: that they're not going to go in the Red Sea 323 00:14:29,480 --> 00:14:32,000 Speaker 7: because of the risk not only to their crews but 324 00:14:32,040 --> 00:14:34,400 Speaker 7: to cargo and ship ships are pretty expensive there, around 325 00:14:34,400 --> 00:14:37,520 Speaker 7: seventy to one hundred million dollars each, so you know 326 00:14:37,880 --> 00:14:41,360 Speaker 7: that's very expensive and insurers do not want insurance insurance 327 00:14:41,400 --> 00:14:43,920 Speaker 7: companies don't want the ships that they're ensuring to be 328 00:14:44,000 --> 00:14:48,280 Speaker 7: in those waters because obviously it'll increase their cost. 329 00:14:48,720 --> 00:14:51,160 Speaker 2: Talk to us about the railroads, what's the what's the 330 00:14:51,160 --> 00:14:54,680 Speaker 2: the theme for twenty twenty four for these railroads? Is 331 00:14:54,720 --> 00:14:57,200 Speaker 2: it kind of just riding the economy? I mean, what 332 00:14:57,320 --> 00:14:59,440 Speaker 2: are you thinking about or what are investors thinking about? 333 00:14:59,720 --> 00:15:01,120 Speaker 8: Well, I'm thinking about service. 334 00:15:01,440 --> 00:15:05,360 Speaker 7: So you know, rails talk a big game about service, 335 00:15:05,400 --> 00:15:06,480 Speaker 7: but I really think they. 336 00:15:06,960 --> 00:15:08,040 Speaker 8: Need to deliver on that. 337 00:15:08,440 --> 00:15:10,840 Speaker 7: More and more of the railroads are kind of have 338 00:15:10,960 --> 00:15:15,360 Speaker 7: pivoted to a precision schedule railroading or precision railroading. They 339 00:15:15,440 --> 00:15:16,880 Speaker 7: like to call it different things, but at the end 340 00:15:16,920 --> 00:15:19,240 Speaker 7: of the day, it's six sigma for the rail industry, 341 00:15:20,240 --> 00:15:23,560 Speaker 7: and in order to lower costs, it can't come. 342 00:15:23,400 --> 00:15:26,080 Speaker 8: At the expense of service. And so you know, you'll 343 00:15:26,120 --> 00:15:28,680 Speaker 8: see railroads maybe have. 344 00:15:28,560 --> 00:15:31,600 Speaker 7: More employees during down cycles and they might normally have 345 00:15:32,040 --> 00:15:35,440 Speaker 7: just so they're prepared for when the uptick happens. And also, 346 00:15:35,520 --> 00:15:38,160 Speaker 7: in addition to service, I think it's growth. It's where 347 00:15:38,160 --> 00:15:39,720 Speaker 7: are they going to grow from? Because they're not going 348 00:15:39,760 --> 00:15:42,440 Speaker 7: to grow for major M and A because the. 349 00:15:42,520 --> 00:15:44,920 Speaker 8: Large class ones will just not be able to merge. 350 00:15:44,920 --> 00:15:46,120 Speaker 8: It's just they're just too big. 351 00:15:46,640 --> 00:15:49,480 Speaker 7: So it'll be tucking acquisitions of short lines and kind 352 00:15:49,520 --> 00:15:52,440 Speaker 7: of looking to take advantage of trends like cross border 353 00:15:53,120 --> 00:15:55,360 Speaker 7: near shoring, that kind of stuff. 354 00:15:55,720 --> 00:15:58,640 Speaker 5: We only have about a little maybe like a minute 355 00:15:58,640 --> 00:16:00,400 Speaker 5: and a half left, but I want to get into 356 00:16:00,440 --> 00:16:02,920 Speaker 5: airlines because it is the holiday travel season. I know 357 00:16:02,960 --> 00:16:05,160 Speaker 5: airlines going into the fourth quarter had cut some of 358 00:16:05,200 --> 00:16:08,480 Speaker 5: their outlooks because of they're worried about demand. But what 359 00:16:08,520 --> 00:16:11,240 Speaker 5: are you seeing because it seems like people are still traveling. 360 00:16:11,400 --> 00:16:13,240 Speaker 7: Well, the only thing I know about airlines is that 361 00:16:13,280 --> 00:16:16,600 Speaker 7: I'm on them. That's George Ferguson, my colleague at BI. 362 00:16:17,200 --> 00:16:18,200 Speaker 8: I do not cover. 363 00:16:18,000 --> 00:16:20,720 Speaker 7: Airlines, but I do cover some of the freight, the 364 00:16:20,760 --> 00:16:24,200 Speaker 7: air freight carriers, and what we're seeing there is capacity 365 00:16:24,280 --> 00:16:26,000 Speaker 7: kind of getting back to. 366 00:16:26,120 --> 00:16:27,360 Speaker 8: Pre pandemic levels. 367 00:16:28,120 --> 00:16:30,640 Speaker 7: And it's interesting because you know, I mentioned earlier that 368 00:16:31,280 --> 00:16:35,480 Speaker 7: liner rates are down twenty nine percent. Air freight rates 369 00:16:35,560 --> 00:16:39,880 Speaker 7: are only down like high single digit, low double digits, 370 00:16:40,160 --> 00:16:43,160 Speaker 7: So they've been a lot more resilient since the pandemic. 371 00:16:43,680 --> 00:16:47,120 Speaker 7: And that's really because there hasn't beant while the capacity 372 00:16:47,240 --> 00:16:50,200 Speaker 7: is nearing pre pandemic levels. There's not a lot of 373 00:16:50,240 --> 00:16:52,080 Speaker 7: slack capacity out there, all right. 374 00:16:52,040 --> 00:16:54,080 Speaker 2: Lee Classical, thanks so much for joining us. Lee Clasow, 375 00:16:54,200 --> 00:16:56,760 Speaker 2: he is a senior analyst covering all the transports and 376 00:16:56,880 --> 00:17:00,240 Speaker 2: logistics for Bloomberg Intelligence. He's also got a podcas Us 377 00:17:00,240 --> 00:17:05,159 Speaker 2: out there talking transports. The focus will be on trucking, railroads, 378 00:17:05,240 --> 00:17:07,800 Speaker 2: ocean and air freight markets and everything in between, so 379 00:17:08,119 --> 00:17:09,760 Speaker 2: check that out. He always gets a lot of good 380 00:17:10,520 --> 00:17:12,800 Speaker 2: guests on there. And again this most recent week, our 381 00:17:12,920 --> 00:17:14,840 Speaker 2: best one of the biggest trucking companies out there. We 382 00:17:14,920 --> 00:17:18,600 Speaker 2: got their chairman, president and CEO on to talk about 383 00:17:18,600 --> 00:17:21,000 Speaker 2: the transport business. So good stuff. Check that out. 384 00:17:21,040 --> 00:17:21,240 Speaker 6: S and P. 385 00:17:21,359 --> 00:17:24,280 Speaker 2: Five hundred Here today holding on to the gains up 386 00:17:24,280 --> 00:17:26,080 Speaker 2: about a half a percent, saying for the dall saying 387 00:17:26,119 --> 00:17:28,719 Speaker 2: for the Nasdaq, the small cappers haveing their day up 388 00:17:28,800 --> 00:17:30,439 Speaker 2: one point seven percent. 389 00:17:30,480 --> 00:17:33,440 Speaker 6: Here you're listening to the tape Cat's are live program 390 00:17:33,480 --> 00:17:37,440 Speaker 6: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, 391 00:17:37,600 --> 00:17:40,320 Speaker 6: the tune in app, Bloomberg dot Com, and the Bloomberg 392 00:17:40,359 --> 00:17:43,440 Speaker 6: Business App. You can also listen live on Amazon Alexa 393 00:17:43,520 --> 00:17:46,800 Speaker 6: from our flagship New York station, just say Alexa play 394 00:17:46,920 --> 00:17:52,120 Speaker 6: Bloomberg eleven thirty. 395 00:17:50,119 --> 00:17:53,320 Speaker 5: Jess and paulse wean to hear in the Bloomberg Interactive 396 00:17:53,400 --> 00:17:56,480 Speaker 5: Brokers studio and tiss the season Paul, because we talk 397 00:17:56,680 --> 00:18:00,359 Speaker 5: so much about seasonality heading into year end. And who 398 00:18:00,440 --> 00:18:03,159 Speaker 5: better to bring in than Jeff Hersh CEO at her 399 00:18:03,200 --> 00:18:06,960 Speaker 5: Sholdings and the editor of The Stock Traders Amanac joining 400 00:18:07,040 --> 00:18:10,560 Speaker 5: us on Zoom to discuss his correct market call this year, 401 00:18:10,640 --> 00:18:13,240 Speaker 5: what to expect for the Santa Claus rally period as 402 00:18:13,280 --> 00:18:16,280 Speaker 5: well as the outperformance here in small caps. So just 403 00:18:16,560 --> 00:18:18,800 Speaker 5: to want to point out, Jeff correctly called the S 404 00:18:18,840 --> 00:18:21,760 Speaker 5: and P five hundreds correction coming out of the summer 405 00:18:21,800 --> 00:18:23,960 Speaker 5: into the fall, and then also the rebound that we're 406 00:18:24,000 --> 00:18:26,920 Speaker 5: seeing here at year end. He also, over a decade ago, 407 00:18:27,000 --> 00:18:29,000 Speaker 5: he predicted that there would be a Dow super boom 408 00:18:29,040 --> 00:18:31,480 Speaker 5: in the wake of the global financial crisis that would 409 00:18:31,560 --> 00:18:34,880 Speaker 5: drive the blue chip average to above thirty eight thousand 410 00:18:34,880 --> 00:18:36,320 Speaker 5: in the mid twenty twenties. If you look where the 411 00:18:36,359 --> 00:18:40,240 Speaker 5: Dows trading at now around records again and currently trading 412 00:18:40,240 --> 00:18:44,159 Speaker 5: around thirty seven five hundred, so not too far away 413 00:18:44,200 --> 00:18:47,040 Speaker 5: from that call you made a while ago. But Jeff, 414 00:18:47,080 --> 00:18:49,480 Speaker 5: it's always really great speaking with you, and thank you 415 00:18:49,520 --> 00:18:51,960 Speaker 5: for taking the time to join us, because I know 416 00:18:52,000 --> 00:18:54,800 Speaker 5: you're busy this morning and had a doctor's appointment, so 417 00:18:54,840 --> 00:18:56,800 Speaker 5: you made times for us. But I wanted to start 418 00:18:56,800 --> 00:18:59,720 Speaker 5: off first because Paul and I always talked to people 419 00:18:59,800 --> 00:19:02,400 Speaker 5: and portfolio managers will come in and you know, once 420 00:19:02,440 --> 00:19:04,240 Speaker 5: we get to the fourth quarter, as you've known because 421 00:19:04,240 --> 00:19:06,040 Speaker 5: you've done this for so long, people will talk about 422 00:19:06,080 --> 00:19:08,720 Speaker 5: the Santa Claus rally period, But can you break down 423 00:19:08,760 --> 00:19:12,320 Speaker 5: to our listeners what the indicator is and what time 424 00:19:12,400 --> 00:19:14,560 Speaker 5: span it actually crosses over. 425 00:19:15,800 --> 00:19:17,120 Speaker 3: Yeah, it gets misused. 426 00:19:17,200 --> 00:19:19,480 Speaker 9: I mean, it's a fun phrase, Santa Claus Rally rolls 427 00:19:19,480 --> 00:19:22,879 Speaker 9: off the tongue, but it's something my father discovered and 428 00:19:22,920 --> 00:19:25,359 Speaker 9: devised back in nineteen seventy two. Is published in a 429 00:19:25,400 --> 00:19:28,920 Speaker 9: seventy three almanac, and it's this short seven trading day 430 00:19:29,160 --> 00:19:31,000 Speaker 9: rally the last five trading. 431 00:19:30,800 --> 00:19:32,639 Speaker 3: Days of the year to the first two of the 432 00:19:32,680 --> 00:19:33,000 Speaker 3: new year. 433 00:19:33,040 --> 00:19:36,520 Speaker 9: And it's not this huge, you know gain, It's about 434 00:19:36,520 --> 00:19:38,640 Speaker 9: a one and a half one point three percent gain 435 00:19:38,720 --> 00:19:40,760 Speaker 9: on the S and PN average. But the key thing 436 00:19:40,840 --> 00:19:43,159 Speaker 9: is that it's not a strategy, it's an indicator. And 437 00:19:43,200 --> 00:19:46,200 Speaker 9: when that period is not up, it's an indication that 438 00:19:46,240 --> 00:19:50,119 Speaker 9: there's something amiss in the markets. Usually have you know, 439 00:19:50,200 --> 00:19:53,960 Speaker 9: traders and and prop desks, people picking up stocks that 440 00:19:54,000 --> 00:19:56,560 Speaker 9: are sold off for tax laws selling. The rest of 441 00:19:56,640 --> 00:20:00,280 Speaker 9: us are you know, sort of away, celebrating with family 442 00:20:00,320 --> 00:20:01,960 Speaker 9: and friends and traveling and that. 443 00:20:02,000 --> 00:20:02,480 Speaker 3: Sort of thing. 444 00:20:02,920 --> 00:20:06,720 Speaker 9: So, as my father said, you know, some sixty seventy 445 00:20:06,800 --> 00:20:11,360 Speaker 9: years ago, if Santa Claus should failed to call, bears 446 00:20:11,359 --> 00:20:12,800 Speaker 9: may come to broaden wall. 447 00:20:13,240 --> 00:20:15,240 Speaker 3: So it's you know. 448 00:20:15,240 --> 00:20:18,240 Speaker 9: An indication that it's a catchy tune he could turn 449 00:20:18,280 --> 00:20:22,400 Speaker 9: a phrase. But we've combined that with the January barometer, 450 00:20:23,040 --> 00:20:23,720 Speaker 9: another one of. 451 00:20:23,640 --> 00:20:25,320 Speaker 3: His inventions back in seventy two. 452 00:20:25,320 --> 00:20:27,239 Speaker 9: At the same time, they're both in that seventy three 453 00:20:27,280 --> 00:20:30,720 Speaker 9: Almenac the full month January barometer. Everyone knows as January goes, 454 00:20:30,720 --> 00:20:33,840 Speaker 9: so goes the year, and then there's the first five 455 00:20:33,920 --> 00:20:35,119 Speaker 9: days early warning system. 456 00:20:35,960 --> 00:20:38,440 Speaker 3: January has become a bit of a profit taking periods. 457 00:20:38,680 --> 00:20:40,960 Speaker 9: It's lost some of its luster in recent years, and 458 00:20:41,000 --> 00:20:43,960 Speaker 9: we've had some errors in the January barometer recently. So 459 00:20:44,000 --> 00:20:48,080 Speaker 9: we combined all three to this this January Indicator trifecta, 460 00:20:48,480 --> 00:20:51,160 Speaker 9: and you know, the bulls win when we hit that trifecta. 461 00:20:51,240 --> 00:20:53,720 Speaker 3: We hit it this year in January twenty three. 462 00:20:54,600 --> 00:20:57,959 Speaker 9: Since nineteen fifty excuse me, doing all three year up 463 00:20:58,080 --> 00:21:01,120 Speaker 9: Santa claus Rally first five days full month January barometer 464 00:21:01,520 --> 00:21:04,120 Speaker 9: the year is up twenty eight of thirty one years, 465 00:21:04,200 --> 00:21:06,320 Speaker 9: ninety point three percent of the time, for an average 466 00:21:06,359 --> 00:21:11,960 Speaker 9: game of seventeen and a half percent. The subsequent eleven 467 00:21:11,960 --> 00:21:14,800 Speaker 9: months February December up twenty seven of those thirty one 468 00:21:15,080 --> 00:21:16,760 Speaker 9: for a twelve point three percent game. 469 00:21:17,359 --> 00:21:20,720 Speaker 3: So you know, we didn't have that traffic in twenty 470 00:21:20,800 --> 00:21:21,359 Speaker 3: twenty two. 471 00:21:21,840 --> 00:21:23,840 Speaker 9: Interesting, you know, we were going we were going into 472 00:21:23,840 --> 00:21:28,119 Speaker 9: a midterm years, so we're already concerned. So we'll be 473 00:21:28,160 --> 00:21:30,040 Speaker 9: looking at those things right now. I'm pretty bullished. I mean, 474 00:21:30,040 --> 00:21:33,120 Speaker 9: this is the pre election year. We've got a good 475 00:21:33,200 --> 00:21:35,639 Speaker 9: chunk of new highs we're seeing right here. Happened in 476 00:21:35,680 --> 00:21:37,479 Speaker 9: December of the pre election year, a lot of them 477 00:21:37,520 --> 00:21:41,000 Speaker 9: on the last trading day. Everyone started getting you know, 478 00:21:41,000 --> 00:21:43,760 Speaker 9: all the bears are now getting on the soft landing bandwagon. 479 00:21:43,840 --> 00:21:46,920 Speaker 9: So we'll be watching these indicators and market action going 480 00:21:46,960 --> 00:21:50,960 Speaker 9: through January. And you know, our forecast, early forecast is 481 00:21:50,960 --> 00:21:53,960 Speaker 9: already pretty bullish for twenty four power of a sitting president. 482 00:21:55,000 --> 00:21:57,520 Speaker 9: But we'll be we'll be fine tuning that in the 483 00:21:57,560 --> 00:22:01,639 Speaker 9: newsletter on Thursday for subscribers, and then we'll be watching 484 00:22:01,680 --> 00:22:05,440 Speaker 9: the market. And if things go awry, you know, whether 485 00:22:05,640 --> 00:22:08,399 Speaker 9: with Santa Claus or January barometer, or something. 486 00:22:08,200 --> 00:22:10,000 Speaker 3: Happens with the election. 487 00:22:10,119 --> 00:22:13,679 Speaker 9: I mean, if something we're changed where Biden's not you know, 488 00:22:13,720 --> 00:22:17,200 Speaker 9: the city president running, that would change our outlook a 489 00:22:17,200 --> 00:22:17,600 Speaker 9: little bit. 490 00:22:18,080 --> 00:22:21,200 Speaker 2: Jeff, you know, we've seen since late October this S 491 00:22:21,240 --> 00:22:24,359 Speaker 2: and P five hundred rally fifteen percent. It's been such 492 00:22:24,359 --> 00:22:27,720 Speaker 2: a moving in November and in December here, what do 493 00:22:27,760 --> 00:22:28,240 Speaker 2: you make of that? 494 00:22:30,440 --> 00:22:35,840 Speaker 9: It's pretty typical for your cycle seasonal behavior. It's encouraging 495 00:22:35,880 --> 00:22:39,240 Speaker 9: everyone had you know, had this. The small caps we're 496 00:22:39,280 --> 00:22:41,600 Speaker 9: in the doghouse. But you know, I've put out some 497 00:22:41,640 --> 00:22:44,040 Speaker 9: of the recent charts about the small cap out performance 498 00:22:44,080 --> 00:22:47,440 Speaker 9: starting you know, picking it around late October, and really 499 00:22:47,640 --> 00:22:50,200 Speaker 9: the bulk of it is the last half of December. 500 00:22:51,119 --> 00:22:52,320 Speaker 3: I mean games, we get games. 501 00:22:52,320 --> 00:22:55,240 Speaker 9: It's supportive or starting to seeing some breath, you know, 502 00:22:55,400 --> 00:22:58,760 Speaker 9: supporting it. We're seeing you know, broader participation in this. 503 00:23:00,160 --> 00:23:03,000 Speaker 9: You know, it's it's a it's a rally based upon 504 00:23:03,320 --> 00:23:07,879 Speaker 9: you know, the success of the economy. There's this productivity 505 00:23:08,000 --> 00:23:11,359 Speaker 9: anticipation with AI market maybe a. 506 00:23:11,320 --> 00:23:12,240 Speaker 3: Little ahead of itself. 507 00:23:12,240 --> 00:23:16,239 Speaker 9: We're gonna have some corrections you know, throughout the you know, 508 00:23:16,280 --> 00:23:18,800 Speaker 9: the the year, just like we had in twenty three, 509 00:23:19,080 --> 00:23:21,280 Speaker 9: a very bullish year, but we had a nice you know, 510 00:23:21,400 --> 00:23:24,200 Speaker 9: ten percent plus correction depending upon the index you look at. 511 00:23:25,359 --> 00:23:25,720 Speaker 6: I make. 512 00:23:27,240 --> 00:23:28,719 Speaker 9: What I make of it is that it's a bullish 513 00:23:28,720 --> 00:23:31,280 Speaker 9: indication that we're we've got further upside here. 514 00:23:31,320 --> 00:23:34,000 Speaker 3: So my biggest concern at the. 515 00:23:33,960 --> 00:23:36,359 Speaker 9: Beginning of this year, I don't know if you remember, 516 00:23:36,440 --> 00:23:39,280 Speaker 9: Jess when when I was talking, is that I wasn't 517 00:23:39,280 --> 00:23:41,720 Speaker 9: bullish enough. I mean, we were already forecasting you know, 518 00:23:42,320 --> 00:23:45,560 Speaker 9: fifteen to twenty percent gains for the for the S 519 00:23:45,560 --> 00:23:49,520 Speaker 9: and P here we are with that, so again, you know, 520 00:23:49,760 --> 00:23:52,280 Speaker 9: maybe I wasn't bullish enough, but pretty close. 521 00:23:53,920 --> 00:23:56,439 Speaker 5: What I'm wondering is because you're walking us through the 522 00:23:56,480 --> 00:23:59,000 Speaker 5: seasonality with small caps, typically we tend to see that 523 00:23:59,119 --> 00:24:02,600 Speaker 5: usually history and more in mid December and then as 524 00:24:02,640 --> 00:24:04,080 Speaker 5: you know, going into year end with some of that 525 00:24:04,119 --> 00:24:07,080 Speaker 5: window dressing, is some of the gains, especially the bulk 526 00:24:07,080 --> 00:24:08,440 Speaker 5: of it that we've seen like you were talking about 527 00:24:08,440 --> 00:24:11,439 Speaker 5: that started out towards the end of October. Does that 528 00:24:11,960 --> 00:24:14,679 Speaker 5: potentially steal some of the typical games we would see 529 00:24:14,880 --> 00:24:16,840 Speaker 5: in the last couple of weeks in December. Do you 530 00:24:16,880 --> 00:24:21,240 Speaker 5: expect us to continue for small caps to continue. 531 00:24:21,680 --> 00:24:25,080 Speaker 9: I think the small caps were catching up with the 532 00:24:25,119 --> 00:24:27,520 Speaker 9: rest of the ball market based upon you know, the 533 00:24:27,560 --> 00:24:29,080 Speaker 9: interest rates finally settling down. 534 00:24:29,080 --> 00:24:31,800 Speaker 3: That seems to have a bigger impact on the small caps. 535 00:24:33,119 --> 00:24:34,600 Speaker 9: I don't know if we're going to get as much 536 00:24:34,920 --> 00:24:37,960 Speaker 9: of that you know, small cap out performance as we've 537 00:24:38,080 --> 00:24:38,480 Speaker 9: just add. 538 00:24:38,800 --> 00:24:40,320 Speaker 3: I don't think it's over whatsoever. 539 00:24:40,600 --> 00:24:42,720 Speaker 9: I think we're going to get that regular, you know 540 00:24:43,520 --> 00:24:45,879 Speaker 9: small cap effect what used to be the January effect 541 00:24:45,920 --> 00:24:48,280 Speaker 9: in last half of December. 542 00:24:47,880 --> 00:24:50,359 Speaker 3: And into into January. I don't think it's taken away 543 00:24:50,400 --> 00:24:50,719 Speaker 3: from it. 544 00:24:50,800 --> 00:24:54,159 Speaker 9: I think it's just catching up and setting us up 545 00:24:54,160 --> 00:24:57,080 Speaker 9: for another for a continuation of small cap back performance. 546 00:24:57,640 --> 00:25:00,680 Speaker 2: Jeff, what do you make of the magnificence been here 547 00:25:00,720 --> 00:25:03,280 Speaker 2: in twenty twenty three that was a unique aspect to 548 00:25:03,359 --> 00:25:04,680 Speaker 2: this market performance this year. 549 00:25:06,520 --> 00:25:09,840 Speaker 9: There's always been leaders, they're still leading. You know, there 550 00:25:09,880 --> 00:25:12,119 Speaker 9: was the nifty to fifty back in the late sixties. 551 00:25:13,600 --> 00:25:16,560 Speaker 9: You know, these companies are doing you know, fabulous things. 552 00:25:17,560 --> 00:25:21,440 Speaker 9: We're using their software and their their products right now 553 00:25:21,480 --> 00:25:25,080 Speaker 9: as we speak. They some of the other you know, 554 00:25:25,359 --> 00:25:29,000 Speaker 9: industries are catching up. But I mean, you've always got leaders. 555 00:25:29,000 --> 00:25:31,760 Speaker 9: I'm not so concerned that the markets, you know, being 556 00:25:31,840 --> 00:25:35,000 Speaker 9: led by seven stocks. There's plenty of other positive you know, 557 00:25:35,560 --> 00:25:39,440 Speaker 9: advancing declining situations and new highs. And you know, I 558 00:25:39,440 --> 00:25:41,640 Speaker 9: think we had the most new high since twenty one 559 00:25:41,760 --> 00:25:45,880 Speaker 9: on the S and P. You know, it's it's not 560 00:25:45,960 --> 00:25:48,680 Speaker 9: just the Magnificen seven. That's an old story. It's kind 561 00:25:48,680 --> 00:25:50,080 Speaker 9: of like the people who are calling for the bear 562 00:25:50,200 --> 00:25:52,680 Speaker 9: mar kid looking at that. It's yield, you know, curb 563 00:25:52,720 --> 00:25:55,439 Speaker 9: in version from from O two, from twenty two. So 564 00:25:56,359 --> 00:25:58,080 Speaker 9: I'm not afraid of the Magnificent seven. 565 00:25:58,160 --> 00:26:00,560 Speaker 3: Let them lead. There'll be other people stepping in. 566 00:26:01,920 --> 00:26:03,800 Speaker 5: We only have about twenty seconds left. But you were 567 00:26:03,840 --> 00:26:06,040 Speaker 5: talking to us earlier about how coming into this year 568 00:26:06,200 --> 00:26:08,040 Speaker 5: you should have been even more bullish, even though you're 569 00:26:08,040 --> 00:26:11,199 Speaker 5: already seeing a fifteen to twenty percent rise in stocks 570 00:26:11,240 --> 00:26:14,040 Speaker 5: this year. What percentage are you expecting in twenty twenty four. 571 00:26:15,600 --> 00:26:18,399 Speaker 9: My early handicapping is about eight to twelve percent on 572 00:26:18,440 --> 00:26:20,560 Speaker 9: the Dow maybe a little bit more at SMP and 573 00:26:20,680 --> 00:26:23,720 Speaker 9: NASDAK and I'll be fine tuning that over the next 574 00:26:23,720 --> 00:26:24,520 Speaker 9: couple of days. 575 00:26:24,280 --> 00:26:27,119 Speaker 3: As we finalize our annual forecast in the newsletter. 576 00:26:28,200 --> 00:26:33,040 Speaker 9: So yeah, I mean above average the election year performance. 577 00:26:33,080 --> 00:26:34,560 Speaker 3: You know what a sitting president's running. 578 00:26:34,560 --> 00:26:37,120 Speaker 9: The Dow's up twelve point eight percent on average, when 579 00:26:37,160 --> 00:26:39,480 Speaker 9: it's an open field it's minus one and a half percent. 580 00:26:39,760 --> 00:26:42,200 Speaker 3: I think we've got a lot of tailwinds here going 581 00:26:42,240 --> 00:26:43,200 Speaker 3: into twenty twenty. 582 00:26:42,960 --> 00:26:48,200 Speaker 9: Four election, technology, AI and a rising market. 583 00:26:48,320 --> 00:26:49,960 Speaker 2: All right, jeff, thanks so much for being with us, 584 00:26:50,000 --> 00:26:52,640 Speaker 2: really appreciated. Jeffrey Hirsch, CEO of Hirsh Holdings and editor 585 00:26:52,680 --> 00:26:54,320 Speaker 2: in chief of The Stock Traders Almanac. 586 00:26:54,920 --> 00:26:58,520 Speaker 6: You're listening to the tape catcher line program Bloomberg Markets 587 00:26:58,600 --> 00:27:01,960 Speaker 6: weekdays at ten am Eastern on Bloomberg Radio, the tune 588 00:27:02,000 --> 00:27:05,000 Speaker 6: in app, Bloomberg dot Com, and the Bloomberg Business App. 589 00:27:05,000 --> 00:27:07,840 Speaker 6: You can also listen live on Amazon Alexa from our 590 00:27:07,840 --> 00:27:12,960 Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 591 00:27:14,119 --> 00:27:16,880 Speaker 2: Only in my career, Jess, I was at lead Chasemanton Bank, 592 00:27:17,000 --> 00:27:19,359 Speaker 2: and I survived their credit training program, which is a 593 00:27:19,359 --> 00:27:22,960 Speaker 2: beast on the street still is, and we were in 594 00:27:23,000 --> 00:27:26,600 Speaker 2: the media group. So we lent not against assets, not 595 00:27:26,640 --> 00:27:29,720 Speaker 2: against like receivables and stuff like that. Cash flow baby 596 00:27:29,920 --> 00:27:32,520 Speaker 2: leverage lending. That's how we did. We go up to 597 00:27:32,560 --> 00:27:35,160 Speaker 2: six times leverage lending on some of these stupid things. 598 00:27:35,200 --> 00:27:37,560 Speaker 2: We did fleet call, which was we'd give them five 599 00:27:37,640 --> 00:27:39,520 Speaker 2: hundred million dollars and we went to our credit committee 600 00:27:39,560 --> 00:27:41,480 Speaker 2: and said, we want to lend them. They have no assets, 601 00:27:42,000 --> 00:27:45,040 Speaker 2: no cash flow, no revenue, but they have air, so 602 00:27:45,080 --> 00:27:47,639 Speaker 2: we were lending against air. Wow, you got that deal done. 603 00:27:48,160 --> 00:27:50,240 Speaker 2: So I love the leverage lending business for Bertic austroians 604 00:27:50,240 --> 00:27:53,480 Speaker 2: a scene managing director at pre Team Partners. I have 605 00:27:53,560 --> 00:27:56,440 Speaker 2: no idea what predium means. What does pretty mean means? 606 00:27:56,520 --> 00:27:56,960 Speaker 9: Value? 607 00:27:57,119 --> 00:28:00,199 Speaker 2: Value in Latin will go? Yes, good enough from me. 608 00:28:01,359 --> 00:28:03,840 Speaker 2: How do you guys talk to us about twenty twenty 609 00:28:03,840 --> 00:28:06,679 Speaker 2: three in kind of the credit market, because you know, 610 00:28:06,680 --> 00:28:08,960 Speaker 2: I'm looking at across a lot of fixing come positive 611 00:28:08,960 --> 00:28:11,840 Speaker 2: returns this year, which is good versus twenty twenty two 612 00:28:12,160 --> 00:28:13,639 Speaker 2: when it wasn't so much, but how was How do 613 00:28:13,680 --> 00:28:15,560 Speaker 2: you view the kind of the credit markets out there? 614 00:28:15,960 --> 00:28:16,720 Speaker 2: So we've had. 615 00:28:16,560 --> 00:28:22,120 Speaker 10: A pretty volatile two years but twenty twenty three very 616 00:28:22,119 --> 00:28:26,480 Speaker 10: strong across the board for leverage. Credit leverage loans as 617 00:28:26,520 --> 00:28:30,920 Speaker 10: of now up almost twelve and a half percent after 618 00:28:31,080 --> 00:28:35,199 Speaker 10: effectively a flat year in twenty twenty two. Most of 619 00:28:35,200 --> 00:28:39,320 Speaker 10: that coming from the absolute yield, so you know, all 620 00:28:39,400 --> 00:28:42,240 Speaker 10: loans are floating rate, and so the base rate at 621 00:28:42,240 --> 00:28:47,000 Speaker 10: over five percent provides a lot of carry in the 622 00:28:47,040 --> 00:28:51,680 Speaker 10: current market. I think as we go forward into twenty 623 00:28:51,720 --> 00:28:57,560 Speaker 10: twenty four, it's going to be, you know, a different 624 00:28:57,640 --> 00:29:02,160 Speaker 10: type of year in terms of of earnings and dispersion 625 00:29:02,200 --> 00:29:04,120 Speaker 10: across the board in terms of credit selection. 626 00:29:04,520 --> 00:29:07,560 Speaker 5: Talk to us more about the earnings picture. What do 627 00:29:07,640 --> 00:29:10,080 Speaker 5: you foresee and where do you see areas of weakness? 628 00:29:10,120 --> 00:29:11,520 Speaker 5: Where do you see areas of strength? 629 00:29:11,920 --> 00:29:15,760 Speaker 10: Sure, so, as we've gone through twenty twenty three, and 630 00:29:15,800 --> 00:29:19,840 Speaker 10: in particular Q three earnings, I think surprised to the upside, 631 00:29:19,880 --> 00:29:22,800 Speaker 10: and that's not surprising as we look back with very 632 00:29:22,840 --> 00:29:26,520 Speaker 10: strong GDP numbers here in the US. I think as 633 00:29:26,520 --> 00:29:31,360 Speaker 10: we go into twenty four, we're going to see more differentiation. 634 00:29:32,920 --> 00:29:35,520 Speaker 10: What we've seen over the last couple of years is 635 00:29:36,320 --> 00:29:41,360 Speaker 10: normalization as we've dealt with inflation factors, be it supply chain, labor, 636 00:29:42,440 --> 00:29:46,000 Speaker 10: and just cost of inputs. I think as we go 637 00:29:46,120 --> 00:29:50,120 Speaker 10: through twenty twenty four and the US consumer is going 638 00:29:50,160 --> 00:29:53,720 Speaker 10: to play a big part in this, does that start 639 00:29:53,760 --> 00:29:56,480 Speaker 10: to impact top line? We've had very strong top line 640 00:29:57,400 --> 00:29:59,920 Speaker 10: for the last couple of years, margins have been on 641 00:30:00,000 --> 00:30:03,520 Speaker 10: all over the place. But I think, uh, you know, 642 00:30:03,560 --> 00:30:06,920 Speaker 10: we're going to have, you know, some sort of slow 643 00:30:06,960 --> 00:30:09,400 Speaker 10: down in the top line, and the degree to that 644 00:30:09,480 --> 00:30:12,280 Speaker 10: slow down is what's going to be most impactful. 645 00:30:13,600 --> 00:30:18,440 Speaker 2: Private credit, Yes, I knew this is guys. How do 646 00:30:18,480 --> 00:30:20,880 Speaker 2: you guys interact with the private credit business? 647 00:30:21,160 --> 00:30:27,240 Speaker 10: Right, So we're focused at Predium almost exclusively on the 648 00:30:27,240 --> 00:30:28,920 Speaker 10: broadly syndicated market. 649 00:30:30,240 --> 00:30:33,720 Speaker 2: I think, so you buy loans from banks from banks, 650 00:30:33,720 --> 00:30:36,640 Speaker 2: So I would do my chase Manhattan Bank. I'd syndicate 651 00:30:36,720 --> 00:30:38,440 Speaker 2: ninety percent because I don't want take any risk. I'm 652 00:30:38,480 --> 00:30:41,200 Speaker 2: in the business degenerating fees, right, so I would sell 653 00:30:41,240 --> 00:30:42,960 Speaker 2: it to you. Yes, nice. 654 00:30:43,320 --> 00:30:47,400 Speaker 10: And so private credits now creating more competition for the 655 00:30:47,600 --> 00:30:53,800 Speaker 10: likes of JP Morgan. What that for sponsors? What they're 656 00:30:53,880 --> 00:30:57,880 Speaker 10: prepared to do is pay up for certainty of execution, 657 00:30:58,120 --> 00:31:00,520 Speaker 10: and that was very important in twenty two twenty three 658 00:31:01,080 --> 00:31:06,720 Speaker 10: when the broadly syndicated market was you know, pretty much 659 00:31:06,800 --> 00:31:10,920 Speaker 10: shut for parts for parts of the year. 660 00:31:11,040 --> 00:31:11,840 Speaker 2: Why was it shut? 661 00:31:12,760 --> 00:31:19,400 Speaker 10: We've seen substantial outflows and COLO creation, which lateralized loan 662 00:31:19,440 --> 00:31:25,320 Speaker 10: obligations represent about three quarters of the buying base for 663 00:31:25,400 --> 00:31:31,040 Speaker 10: broadly syndicated loans, and issuance was slow to start this year. 664 00:31:31,640 --> 00:31:36,760 Speaker 10: So the private credit market generally cost sponsors about two 665 00:31:36,800 --> 00:31:40,600 Speaker 10: hundred basis points more in terms of yeah. 666 00:31:40,520 --> 00:31:43,480 Speaker 2: And why go there because I can't get a bank 667 00:31:43,520 --> 00:31:43,880 Speaker 2: to do it? 668 00:31:44,760 --> 00:31:45,960 Speaker 10: Certainty of execution? 669 00:31:46,200 --> 00:31:46,480 Speaker 6: Okay? 670 00:31:47,320 --> 00:31:49,920 Speaker 10: And I think that that started to shift as the 671 00:31:49,960 --> 00:31:54,680 Speaker 10: broadly syndicated primary markets opened up and is quite strong 672 00:31:54,760 --> 00:31:59,600 Speaker 10: right now. So I think the sponsors want both markets 673 00:31:59,640 --> 00:32:05,280 Speaker 10: and include high yield as well, to be you know, 674 00:32:05,440 --> 00:32:06,560 Speaker 10: are you accessible? 675 00:32:06,720 --> 00:32:09,719 Speaker 2: Are you surprised that the banks have allowed that business 676 00:32:09,720 --> 00:32:12,000 Speaker 2: to walk across the street. I never would have done that. 677 00:32:12,840 --> 00:32:15,520 Speaker 10: Yeah, I think they've been surprised as well. So private 678 00:32:15,520 --> 00:32:20,080 Speaker 10: credit now is comparable in size, you know, a trillion 679 00:32:20,160 --> 00:32:24,400 Speaker 10: plus to high yield and loans. I think they're the 680 00:32:24,440 --> 00:32:27,120 Speaker 10: banks are playing catch up in terms of what role 681 00:32:27,280 --> 00:32:28,520 Speaker 10: they have in that market. 682 00:32:28,800 --> 00:32:32,200 Speaker 5: Yes, private debt was thought to be really pressured as 683 00:32:32,320 --> 00:32:35,040 Speaker 5: rates were going to rise, but that didn't happen. Walk 684 00:32:35,120 --> 00:32:36,920 Speaker 5: us through why that didn't happen. 685 00:32:37,720 --> 00:32:38,000 Speaker 2: Yeah. 686 00:32:38,040 --> 00:32:42,120 Speaker 10: So I think that, you know, one thing with private 687 00:32:42,120 --> 00:32:45,840 Speaker 10: debt that we've experienced or not experienced, but seen over 688 00:32:45,840 --> 00:32:49,680 Speaker 10: the last uh, you know, a few quarters, is they're 689 00:32:49,800 --> 00:32:54,760 Speaker 10: very aggressive in terms of terms and as rates have risen, 690 00:32:55,080 --> 00:32:59,920 Speaker 10: and I think some of these companies and multiples that 691 00:33:00,000 --> 00:33:03,520 Speaker 10: sponsors are paying, they're having a hard time dealing with 692 00:33:03,560 --> 00:33:06,920 Speaker 10: the increased interest cost and so we're starting to see 693 00:33:07,320 --> 00:33:10,480 Speaker 10: and this I think is scary. And I was also 694 00:33:10,520 --> 00:33:15,720 Speaker 10: trained at JP Martin so goes back to my training days. 695 00:33:16,400 --> 00:33:22,040 Speaker 10: First lean pick loans, Oh boy, sixteen percent first lian 696 00:33:22,160 --> 00:33:22,640 Speaker 10: pick that. 697 00:33:24,600 --> 00:33:25,400 Speaker 5: Yes, is. 698 00:33:26,960 --> 00:33:29,920 Speaker 10: You know, put in place because they don't have the 699 00:33:30,040 --> 00:33:35,600 Speaker 10: cash flow to service and cash interest. I think setting 700 00:33:35,680 --> 00:33:41,320 Speaker 10: up for you know, volatility in the future, but as 701 00:33:41,360 --> 00:33:43,080 Speaker 10: purely a function of where rates sit today. 702 00:33:44,080 --> 00:33:46,800 Speaker 2: How do you think that twenty twenty four deal market 703 00:33:46,840 --> 00:33:49,920 Speaker 2: will be ergo the kind of the stuff that you 704 00:33:49,960 --> 00:33:52,440 Speaker 2: guys are going to see coming out of the bank syndication. 705 00:33:52,920 --> 00:33:54,400 Speaker 10: Yeah, I think we're going to see a real pick 706 00:33:54,480 --> 00:33:58,440 Speaker 10: up in primary activity next year. I think the biggest 707 00:33:59,560 --> 00:34:03,360 Speaker 10: factor this year has just been the gap between buy 708 00:34:03,440 --> 00:34:08,000 Speaker 10: and sell side multiples. I think that started to contract. 709 00:34:08,239 --> 00:34:10,360 Speaker 10: We've started to see m and a pick up. I 710 00:34:10,360 --> 00:34:13,560 Speaker 10: would expect that to continue next year. And I think 711 00:34:14,160 --> 00:34:17,840 Speaker 10: as you know, as our market you know, continues to 712 00:34:18,040 --> 00:34:23,239 Speaker 10: remain open and is active, you'll see a resurgence of. 713 00:34:23,400 --> 00:34:25,480 Speaker 2: Are you guys at Predium raising capital now? 714 00:34:26,200 --> 00:34:30,080 Speaker 10: Yes, yes, we are raising capital across all products. 715 00:34:30,600 --> 00:34:33,759 Speaker 2: And what's the pitch here, like, what's the what's the 716 00:34:33,800 --> 00:34:34,480 Speaker 2: reason that. 717 00:34:34,440 --> 00:34:35,000 Speaker 8: You get right? 718 00:34:35,120 --> 00:34:38,840 Speaker 10: So we think that next year we're going to have 719 00:34:38,880 --> 00:34:43,319 Speaker 10: a lot of dispersion and that credit selection is going 720 00:34:43,400 --> 00:34:48,080 Speaker 10: to be a big differentiator among performance. And I think 721 00:34:48,400 --> 00:34:53,160 Speaker 10: this goes to sector selection and individual name selection, and 722 00:34:53,200 --> 00:34:54,680 Speaker 10: that's our strong suit. 723 00:34:55,040 --> 00:34:58,000 Speaker 5: Yes, So looking at credit, what do you think is 724 00:34:58,040 --> 00:34:59,760 Speaker 5: tells us about economic growth? 725 00:35:01,200 --> 00:35:06,160 Speaker 10: Well, I think as we saw in Q three earnings 726 00:35:06,239 --> 00:35:09,839 Speaker 10: were you know, continue to be strong and actually accelerated 727 00:35:09,920 --> 00:35:14,520 Speaker 10: from the first half. I actually think the US economy 728 00:35:14,600 --> 00:35:18,120 Speaker 10: is doing quite well. And that's what we've experienced in 729 00:35:18,160 --> 00:35:21,480 Speaker 10: in pretty broad based industries. 730 00:35:21,600 --> 00:35:23,840 Speaker 5: What would you need to see in the credit space 731 00:35:24,200 --> 00:35:26,279 Speaker 5: to raise any sort of red flags to you? I 732 00:35:26,280 --> 00:35:28,000 Speaker 5: mean it seems like you're not seeing those yet, But 733 00:35:28,160 --> 00:35:31,239 Speaker 5: what particular indicators would you need to see for them 734 00:35:31,400 --> 00:35:33,000 Speaker 5: kind of alarms go off in your mind. As far 735 00:35:33,040 --> 00:35:34,279 Speaker 5: as growth stalling out. 736 00:35:34,760 --> 00:35:38,520 Speaker 10: Yeah, so what we haven't seen is a deceleration of 737 00:35:38,560 --> 00:35:42,040 Speaker 10: the top line, and that to me is a function 738 00:35:42,080 --> 00:35:48,240 Speaker 10: of strength in the US consumer. We've seen a deceleration 739 00:35:48,360 --> 00:35:52,560 Speaker 10: of growth to some degree, but not negative growth year 740 00:35:52,600 --> 00:35:56,120 Speaker 10: on year, quarter and quarter. I think we'd need to 741 00:35:56,160 --> 00:36:02,000 Speaker 10: see that in a more broad based way across consumer 742 00:36:02,840 --> 00:36:05,080 Speaker 10: driven sectors, which we haven't seen at all. 743 00:36:05,800 --> 00:36:08,360 Speaker 2: Interesting. Roberta, thank you so much for joining us. Roberta 744 00:36:08,440 --> 00:36:12,040 Speaker 2: os She's a senior managing director at Pretium Partners, which 745 00:36:12,040 --> 00:36:16,919 Speaker 2: again means value value. Thank you listening the new language. Yeah, 746 00:36:16,960 --> 00:36:18,359 Speaker 2: maybe one ear and other ear. 747 00:36:20,040 --> 00:36:23,120 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 748 00:36:23,160 --> 00:36:26,920 Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever 749 00:36:27,040 --> 00:36:30,760 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 750 00:36:30,960 --> 00:36:33,120 Speaker 1: at Matt Miller nineteen seventy three. 751 00:36:33,320 --> 00:36:35,720 Speaker 2: And I'm Faull Sweeney. I'm on Twitter at pt Sweeney. 752 00:36:35,840 --> 00:36:38,480 Speaker 2: Before the podcast, you can always catch us worldwide at 753 00:36:38,520 --> 00:36:40,239 Speaker 2: Bloomberg Radio.