1 00:00:00,080 --> 00:00:02,639 Speaker 1: Joining us now to discuss as Apollo's Torsten Slock Larry 2 00:00:02,680 --> 00:00:05,320 Speaker 1: Adam of Raymond James. Larry first to you. The winners 3 00:00:05,320 --> 00:00:07,800 Speaker 1: are twenty twenty three. Do they just keep on winning? 4 00:00:08,880 --> 00:00:10,480 Speaker 2: I think they do, John. I mean, if you think 5 00:00:10,480 --> 00:00:12,480 Speaker 2: about it, what you saw yesterday, what you've seen from 6 00:00:12,760 --> 00:00:15,560 Speaker 2: the big megacap tech stocks in general, has been the 7 00:00:15,560 --> 00:00:18,840 Speaker 2: trifecta of good things. Right They've beaten on the top line, 8 00:00:19,079 --> 00:00:21,680 Speaker 2: they've beaten on the bottom line because their margins continue 9 00:00:21,720 --> 00:00:25,279 Speaker 2: to expand, and probably most important, they've continued to raise 10 00:00:25,320 --> 00:00:27,440 Speaker 2: their guidance in the future. And when I look at 11 00:00:27,520 --> 00:00:30,520 Speaker 2: valuations right now, the valuations of those in aggregate are 12 00:00:30,520 --> 00:00:32,520 Speaker 2: pretty much where they've been over the last three years. 13 00:00:32,760 --> 00:00:35,080 Speaker 2: But over that time period they've more than doubled the 14 00:00:35,080 --> 00:00:36,760 Speaker 2: performance of the S and P five hundred, So they've 15 00:00:36,760 --> 00:00:39,800 Speaker 2: been keeping pace with their earnings with how good they've 16 00:00:39,800 --> 00:00:41,360 Speaker 2: been doing in the market. So I think that continues 17 00:00:41,400 --> 00:00:43,560 Speaker 2: in the next year, where the market's clearly going to 18 00:00:43,600 --> 00:00:44,960 Speaker 2: be challenged for our growth. 19 00:00:45,200 --> 00:00:47,960 Speaker 1: That single name two hundred and forty percent plus gains. 20 00:00:48,240 --> 00:00:50,720 Speaker 1: Yet today on Nvidia, the commentary on the south Side 21 00:00:50,720 --> 00:00:53,440 Speaker 1: Evercord just another run of the mill blowout quarter for 22 00:00:53,600 --> 00:00:57,400 Speaker 1: Nvidio Bloomberg Intelligence in Video's third straight double digit percentage 23 00:00:57,440 --> 00:01:01,640 Speaker 1: bat of sales consensus this year, and they raised Torstan. 24 00:01:01,800 --> 00:01:03,600 Speaker 1: You put out a note in the last week. It 25 00:01:03,640 --> 00:01:07,120 Speaker 1: wasn't about mecacap tech. It was about small caps forty 26 00:01:07,200 --> 00:01:11,080 Speaker 1: percent of the companies on the rustle negative earnings, Towston, 27 00:01:11,160 --> 00:01:12,240 Speaker 1: how unusual is that? 28 00:01:12,680 --> 00:01:13,880 Speaker 3: That is really unusual? 29 00:01:14,000 --> 00:01:16,280 Speaker 4: I mean, what the big picture really here is that 30 00:01:16,400 --> 00:01:18,480 Speaker 4: everything that's going on in the tech world, it doesn't have. 31 00:01:18,520 --> 00:01:19,640 Speaker 3: It in a vacuum. 32 00:01:19,880 --> 00:01:22,640 Speaker 4: What's very critical about this situation is that we still 33 00:01:22,640 --> 00:01:25,400 Speaker 4: have the FED having rates at very high levels at 34 00:01:25,400 --> 00:01:28,640 Speaker 4: the moment, and that's certainly having a negative impact across 35 00:01:28,720 --> 00:01:31,160 Speaker 4: the board on companies that have no cash flows. 36 00:01:31,480 --> 00:01:32,400 Speaker 3: So that's why. 37 00:01:32,200 --> 00:01:35,560 Speaker 4: Even the forward pe for Nvidia is of course also 38 00:01:35,920 --> 00:01:38,640 Speaker 4: heavily depend on whether we will have that slow down 39 00:01:38,640 --> 00:01:40,959 Speaker 4: that the FED is trying to engineer. So I look 40 00:01:41,000 --> 00:01:43,080 Speaker 4: at this from the broadest perspective of whether the FED 41 00:01:43,120 --> 00:01:45,200 Speaker 4: is still trying to slow the economy down, and with 42 00:01:45,280 --> 00:01:47,280 Speaker 4: that backdrop, it actually makes more sense to look at 43 00:01:47,280 --> 00:01:50,400 Speaker 4: the trailing pe, and the trailing pe of the Magnificent 44 00:01:50,480 --> 00:01:53,080 Speaker 4: seven is about fifty so that also still leads to 45 00:01:53,160 --> 00:01:55,160 Speaker 4: the conclusion that these things are still, in my view, 46 00:01:55,360 --> 00:01:56,559 Speaker 4: quite heavily overvalued. 47 00:01:56,720 --> 00:01:58,480 Speaker 1: It's awsten how challenged the thing's going to get for 48 00:01:58,520 --> 00:02:01,520 Speaker 1: the smaller numbers, the smaller, the smaller companies. Given that 49 00:02:01,520 --> 00:02:03,520 Speaker 1: we just kind of jobless claims at two on nine, 50 00:02:03,680 --> 00:02:05,880 Speaker 1: unemployment sat for four percent, We just had a quarter 51 00:02:06,120 --> 00:02:08,640 Speaker 1: of GDP growth close to five percent, and you've still 52 00:02:08,639 --> 00:02:11,960 Speaker 1: got forty percent of the companies under rustle with negative earnings. 53 00:02:12,320 --> 00:02:14,760 Speaker 4: That is what's so incredible, Jonathan Namy that how can 54 00:02:14,800 --> 00:02:18,280 Speaker 4: companies not make money if this supposedly is a booming economy? 55 00:02:18,600 --> 00:02:21,079 Speaker 4: And if I type ECFC, go on my bloombergstureen and 56 00:02:21,120 --> 00:02:23,480 Speaker 4: look at what the consensus expects for the next three quarters, 57 00:02:23,600 --> 00:02:25,840 Speaker 4: GDP growth is going to be basically half a percent 58 00:02:26,080 --> 00:02:28,560 Speaker 4: for the next nine months. So with that backdrop, this 59 00:02:28,680 --> 00:02:31,880 Speaker 4: expectation that everything will still be fine for the next 60 00:02:31,880 --> 00:02:33,079 Speaker 4: six twelve months, I. 61 00:02:33,000 --> 00:02:34,320 Speaker 3: Think that's completely misguided. 62 00:02:34,360 --> 00:02:36,040 Speaker 4: The FED is trying to slow the economy down so 63 00:02:36,080 --> 00:02:38,400 Speaker 4: get inflation to come down, and with that backdrop, we 64 00:02:38,400 --> 00:02:40,120 Speaker 4: should expect rates higher for longer. 65 00:02:40,400 --> 00:02:43,600 Speaker 3: So there's just a missing conversation about rates are. 66 00:02:43,520 --> 00:02:46,480 Speaker 4: Actually going to still continue to have a negative impact 67 00:02:46,480 --> 00:02:49,800 Speaker 4: on companies with high leverage, with low coverage ratios, and 68 00:02:49,840 --> 00:02:52,640 Speaker 4: we're generally weak cash flows. So I still think that 69 00:02:52,760 --> 00:02:55,239 Speaker 4: high rates are going to have a negative impact on 70 00:02:55,280 --> 00:02:58,160 Speaker 4: the economy, just like it's had on consumers, on corporates, 71 00:02:58,200 --> 00:03:00,800 Speaker 4: and on banks, and I think that that just continues. 72 00:03:00,960 --> 00:03:03,520 Speaker 1: Larry, with that in mind, why with this rally broadened 73 00:03:03,520 --> 00:03:04,519 Speaker 1: out anytime soon? 74 00:03:05,280 --> 00:03:06,919 Speaker 2: Well, I think I don't necessarily thin it's going into 75 00:03:06,919 --> 00:03:10,200 Speaker 2: starily broaden out that quickly. I agree with Torson in 76 00:03:10,280 --> 00:03:12,359 Speaker 2: regard to that. I do think we have a mild 77 00:03:12,400 --> 00:03:15,839 Speaker 2: recession in the first half of next year, and that's 78 00:03:15,880 --> 00:03:18,440 Speaker 2: typically when you start to see small caps start to 79 00:03:18,440 --> 00:03:21,360 Speaker 2: pick up, right, because it's a forelooking indicator. So once 80 00:03:21,400 --> 00:03:24,440 Speaker 2: we actually get into the recession, you'll start to price 81 00:03:24,440 --> 00:03:26,920 Speaker 2: in the prospects of the recovery. So I wouldn't be 82 00:03:27,080 --> 00:03:31,280 Speaker 2: overly bullish on the broadening until we actually see the 83 00:03:31,320 --> 00:03:32,880 Speaker 2: recession actually occur. 84 00:03:33,280 --> 00:03:35,880 Speaker 1: Well, let's talk about the winner in Vidio, a big 85 00:03:35,920 --> 00:03:39,120 Speaker 1: time yere today reporting another stellar quarter. Anton outelote with 86 00:03:39,240 --> 00:03:40,720 Speaker 1: us on a West coast for more and morning Ged. 87 00:03:41,280 --> 00:03:42,440 Speaker 3: Yeah, good morning, Jonathan. 88 00:03:42,560 --> 00:03:44,680 Speaker 5: Just on the fiscal third quarter just gone, you know, 89 00:03:45,000 --> 00:03:47,880 Speaker 5: a beat across the board against cell side expectations, but 90 00:03:47,920 --> 00:03:51,840 Speaker 5: also I'm hearing you pretty comfortably against some byside expectations, 91 00:03:51,840 --> 00:03:55,080 Speaker 5: which were much more elevated. In the third quarter, they 92 00:03:55,080 --> 00:03:57,240 Speaker 5: booked ten billion dollars of net income, and the way 93 00:03:57,240 --> 00:03:59,720 Speaker 5: that I think about it is that that's more net 94 00:03:59,800 --> 00:04:02,080 Speaker 5: inc come than they booked in the entirety of full 95 00:04:02,120 --> 00:04:05,360 Speaker 5: year full year fiscal twenty three, remember when they were 96 00:04:05,400 --> 00:04:07,880 Speaker 5: impacted by the PC slump. In other words, in videos, 97 00:04:07,880 --> 00:04:10,600 Speaker 5: shipping these h one hundred GPUs is the only game 98 00:04:10,640 --> 00:04:13,400 Speaker 5: in town for that, shipping them at volume and doing 99 00:04:13,480 --> 00:04:16,760 Speaker 5: it quite profitably. The outlook is key right for the 100 00:04:16,760 --> 00:04:20,280 Speaker 5: fiscal fourth quarter, twenty billion dollars of revenue plus or 101 00:04:20,360 --> 00:04:22,120 Speaker 5: minus two percent, But even if you go of the 102 00:04:22,200 --> 00:04:25,560 Speaker 5: minus two percent, they're still way above the average of 103 00:04:25,600 --> 00:04:29,360 Speaker 5: analyst estimates and the consensus side. The story is about 104 00:04:29,400 --> 00:04:34,080 Speaker 5: the impact of US technology export cubs. They are being impacted. 105 00:04:34,160 --> 00:04:36,960 Speaker 5: Those updates on the policy side came late in the 106 00:04:37,040 --> 00:04:39,680 Speaker 5: quarter they just reported, But what they're saying is that 107 00:04:39,720 --> 00:04:42,680 Speaker 5: there will be a sharp drop in shipments to China 108 00:04:42,800 --> 00:04:45,440 Speaker 5: in the fiscal fourth quarter. The way that the market 109 00:04:45,520 --> 00:04:47,040 Speaker 5: seems to be looking at it, though, is that the 110 00:04:47,080 --> 00:04:49,360 Speaker 5: guidance for that fiscal fourth quarter period could. 111 00:04:49,200 --> 00:04:50,039 Speaker 3: Have been even better. 112 00:04:50,160 --> 00:04:52,800 Speaker 5: They're leaving money on the table, and I just reiterate, 113 00:04:52,839 --> 00:04:54,600 Speaker 5: we can go on this later in the show. Their 114 00:04:54,640 --> 00:04:58,480 Speaker 5: supply constrained, in other words, that if they stop shipping 115 00:04:58,480 --> 00:05:01,080 Speaker 5: to China, there is demand elsewhere that they can divert 116 00:05:01,120 --> 00:05:04,640 Speaker 5: that supply to. That's a part of the equation. The 117 00:05:04,760 --> 00:05:07,480 Speaker 5: long long term with China is still a massive question mark. 118 00:05:07,680 --> 00:05:10,360 Speaker 1: Just absolutely incredible. Let's catch up around the opening bow 119 00:05:10,880 --> 00:05:13,920 Speaker 1: again in video by two hundred and forty two percent 120 00:05:14,200 --> 00:05:16,760 Speaker 1: year today, month today, the month of November. We caught 121 00:05:16,760 --> 00:05:18,320 Speaker 1: it with Jack Caffrey of JP Morgan. He had a 122 00:05:18,360 --> 00:05:21,120 Speaker 1: great line on this, what a year November's been months 123 00:05:21,120 --> 00:05:22,920 Speaker 1: to day on the nastack up more than ten percent 124 00:05:23,200 --> 00:05:25,280 Speaker 1: on the S and P five hundred at more than 125 00:05:25,600 --> 00:05:29,000 Speaker 1: eight percent. That's the equity market, sourst and we have 126 00:05:29,040 --> 00:05:31,800 Speaker 1: to talk about the economy and in some ways sometimes 127 00:05:31,800 --> 00:05:34,840 Speaker 1: it's divorced by from what's happening inequities, and you can 128 00:05:34,839 --> 00:05:37,159 Speaker 1: see that just looking at delinquency rates, what's happening with 129 00:05:37,160 --> 00:05:39,800 Speaker 1: the consumer Tawston, and you're still making the argument that 130 00:05:39,800 --> 00:05:42,320 Speaker 1: that tiening is starting to buy that. You can see that, 131 00:05:42,400 --> 00:05:45,640 Speaker 1: say beyond jobless claims, which came in much lower than 132 00:05:45,680 --> 00:05:48,520 Speaker 1: anticipated this morning, and you still seeing evidence that high 133 00:05:48,640 --> 00:05:49,440 Speaker 1: rates are bitick. 134 00:05:50,000 --> 00:05:52,479 Speaker 4: So think about the bigger picture here, that the FIT 135 00:05:52,680 --> 00:05:55,320 Speaker 4: is still trying to get the economy to slow down. 136 00:05:55,720 --> 00:05:57,800 Speaker 4: And what has happened in response to find hikes is 137 00:05:57,839 --> 00:06:00,280 Speaker 4: exactly as you're saying, Jonathan, We're seeing the linguagy going 138 00:06:00,320 --> 00:06:02,560 Speaker 4: up on credit card and auto loans. We're seeing default 139 00:06:02,640 --> 00:06:05,080 Speaker 4: rates going up for high yielded loans quite quickly in 140 00:06:05,120 --> 00:06:07,520 Speaker 4: the last six months, and we're also seeing bank lendings 141 00:06:07,560 --> 00:06:08,160 Speaker 4: slowing down. 142 00:06:08,440 --> 00:06:10,919 Speaker 3: That's exactly what the textbook would have predicted. 143 00:06:11,200 --> 00:06:13,760 Speaker 4: The FED is in the process of slowing the economy down, 144 00:06:14,080 --> 00:06:15,919 Speaker 4: and the result of that will of course also be 145 00:06:16,040 --> 00:06:18,760 Speaker 4: that earnings will slow down. And if we don't get 146 00:06:18,760 --> 00:06:20,560 Speaker 4: that slow down, the FIT will just keep on saying, 147 00:06:20,680 --> 00:06:23,560 Speaker 4: like they're communicated in the minutes yesterday, Well, but then 148 00:06:23,560 --> 00:06:26,719 Speaker 4: maybe we'll just be still considering hiking even further. So 149 00:06:26,839 --> 00:06:30,000 Speaker 4: if we don't get the slowdown called it organically where 150 00:06:30,000 --> 00:06:32,120 Speaker 4: we are at the moment, well, then we may all 151 00:06:32,160 --> 00:06:35,120 Speaker 4: be surprised that the FED might then begin to rehike 152 00:06:35,360 --> 00:06:35,920 Speaker 4: rates are again. 153 00:06:36,160 --> 00:06:38,200 Speaker 3: In other words, the discussion really here. 154 00:06:38,160 --> 00:06:40,720 Speaker 4: Is that this is all happening with the backdrop of 155 00:06:40,760 --> 00:06:43,039 Speaker 4: the FET trying to slow things down, and they are 156 00:06:43,279 --> 00:06:46,080 Speaker 4: succeeding on some fronts. But I think a number of 157 00:06:46,080 --> 00:06:48,920 Speaker 4: these developments are completely being ignored by the stock market, 158 00:06:48,960 --> 00:06:51,640 Speaker 4: including these slowing things that we're seeing on the consumer, 159 00:06:51,839 --> 00:06:53,440 Speaker 4: on the corporate, and on the banking side. 160 00:06:53,480 --> 00:06:55,760 Speaker 1: To some extent, the FETA reserve needs to be blamed 161 00:06:55,760 --> 00:06:57,400 Speaker 1: for that. There is a takeaway in the last month. 162 00:06:57,480 --> 00:07:00,320 Speaker 1: This labor market is no longer a reason for this 163 00:07:00,400 --> 00:07:02,480 Speaker 1: said to be hawkish. Do you think that's the wrong 164 00:07:02,520 --> 00:07:04,440 Speaker 1: way of looking at this labor market? 165 00:07:04,600 --> 00:07:06,839 Speaker 4: Well, I think that's a number of I do agree 166 00:07:06,880 --> 00:07:08,560 Speaker 4: with what you're saying. It is still a bit puzzling. 167 00:07:08,560 --> 00:07:08,960 Speaker 3: White job. 168 00:07:09,000 --> 00:07:11,480 Speaker 4: This claims continues to be so weak I'm sorry, so 169 00:07:11,520 --> 00:07:13,960 Speaker 4: strong and at these low levels. But what is important 170 00:07:14,040 --> 00:07:15,880 Speaker 4: is that we have seen weakness in the unit pointary 171 00:07:16,520 --> 00:07:17,640 Speaker 4: traught at three point four. 172 00:07:17,720 --> 00:07:18,840 Speaker 3: Now we have three point nine. 173 00:07:18,920 --> 00:07:22,080 Speaker 4: It is trending higher, So of course we'll need to 174 00:07:22,120 --> 00:07:24,520 Speaker 4: see another few months exactly what the weakness of the 175 00:07:24,600 --> 00:07:26,600 Speaker 4: labor market is going to look like, but the number 176 00:07:26,640 --> 00:07:29,280 Speaker 4: of job openings is coming down, the work week is 177 00:07:29,320 --> 00:07:32,360 Speaker 4: coming down. You're seeing the warn notices has also been 178 00:07:32,360 --> 00:07:35,280 Speaker 4: softening across the board. A number of the labor market 179 00:07:35,320 --> 00:07:38,920 Speaker 4: indicators are suggesting that things will continue to weaken. We're 180 00:07:38,920 --> 00:07:41,800 Speaker 4: also seeing youth unemployment has gone up quite substantially in 181 00:07:41,840 --> 00:07:45,600 Speaker 4: the last six months. All these things point to labor demand, 182 00:07:45,880 --> 00:07:47,920 Speaker 4: which is exactly also the way that the FED will 183 00:07:48,000 --> 00:07:50,560 Speaker 4: be thinking about their rate hikes are working. It's just 184 00:07:50,600 --> 00:07:52,920 Speaker 4: taking a bit longer time, partly because there were more 185 00:07:52,960 --> 00:07:56,040 Speaker 4: access savings and partly because of the fiscal stimulus that're still. 186 00:07:55,840 --> 00:07:58,600 Speaker 3: Coming from a number of different fronts. So I still 187 00:07:58,600 --> 00:07:59,000 Speaker 3: think that. 188 00:07:58,960 --> 00:08:00,920 Speaker 4: We should be thinking of this in terms of what 189 00:08:01,000 --> 00:08:02,920 Speaker 4: is the fit trying to do. They're trying to get 190 00:08:02,920 --> 00:08:05,160 Speaker 4: inflation out of control. That's also how we we think 191 00:08:05,200 --> 00:08:06,840 Speaker 4: about who should be thinking about earnings. 192 00:08:07,080 --> 00:08:09,880 Speaker 1: Larry. If the answer to where is high unemployment is 193 00:08:09,920 --> 00:08:11,880 Speaker 1: it still just wait it's come in. 194 00:08:12,040 --> 00:08:13,080 Speaker 3: No, I think it is coming here. 195 00:08:13,160 --> 00:08:15,280 Speaker 2: One thing I'd add to those job as claims numbers 196 00:08:15,360 --> 00:08:18,600 Speaker 2: is you look at the continuing claims right, They're starting 197 00:08:18,600 --> 00:08:20,880 Speaker 2: to approach levels that we haven't seen in two years, 198 00:08:20,920 --> 00:08:23,360 Speaker 2: and I think that that's really getting to the point 199 00:08:23,360 --> 00:08:26,080 Speaker 2: that it's actually getting tougher to go find a new job. 200 00:08:26,400 --> 00:08:28,120 Speaker 2: So I think that's going to start to slow. When 201 00:08:28,160 --> 00:08:30,600 Speaker 2: I look at other spending activity, you know, if you 202 00:08:30,640 --> 00:08:32,840 Speaker 2: look at credit card activity, it's it's been flat to 203 00:08:32,880 --> 00:08:36,120 Speaker 2: slightly down. So that shows me that the consumer's starting 204 00:08:36,160 --> 00:08:38,560 Speaker 2: to slow their spending. And when we do our own 205 00:08:38,600 --> 00:08:41,280 Speaker 2: survey for clients, you know, it was kind of interesting 206 00:08:41,320 --> 00:08:44,120 Speaker 2: that only five percent of the respondents that we had 207 00:08:44,280 --> 00:08:46,520 Speaker 2: actually said they were going to spend more over the 208 00:08:46,520 --> 00:08:49,240 Speaker 2: next six months. Thirty three percent said they were going 209 00:08:49,320 --> 00:08:51,800 Speaker 2: to spend less. So that tells me that the consumer 210 00:08:51,880 --> 00:08:55,000 Speaker 2: is really starting to slow. And as Torsten said, the 211 00:08:55,000 --> 00:08:56,640 Speaker 2: reason it hasn't slow yet is because we had that 212 00:08:56,720 --> 00:08:58,280 Speaker 2: buffer of excess savings. 213 00:08:58,559 --> 00:09:00,160 Speaker 3: Well that buffer is pretty much. 214 00:09:00,080 --> 00:09:02,080 Speaker 2: Been evaporated, and I think it's really going to start 215 00:09:02,120 --> 00:09:03,800 Speaker 2: to bite as we sit here right. 216 00:09:03,640 --> 00:09:06,079 Speaker 1: Now, Larry, we heard from some retailers, a whole bunch 217 00:09:06,120 --> 00:09:08,120 Speaker 1: of them actually in the last week or so. Are 218 00:09:08,160 --> 00:09:11,200 Speaker 1: you seeing that in the earnings the commentary from those companies. 219 00:09:11,480 --> 00:09:13,000 Speaker 2: Yeah, I mean, I think what you're seeing there is 220 00:09:13,000 --> 00:09:15,840 Speaker 2: that there's a struggle on the top line. They're beating 221 00:09:15,880 --> 00:09:18,960 Speaker 2: their current earnings by having expense management and working down 222 00:09:19,040 --> 00:09:22,280 Speaker 2: their inventories. But if you look at guidance, guidance has 223 00:09:22,320 --> 00:09:25,560 Speaker 2: been very soft for each of those major retailers, and 224 00:09:25,600 --> 00:09:28,199 Speaker 2: I think that that is a sign that they're seeing 225 00:09:28,200 --> 00:09:29,800 Speaker 2: the consumer really weakening. 226 00:09:29,920 --> 00:09:30,440 Speaker 3: In fact, one of. 227 00:09:30,440 --> 00:09:32,199 Speaker 2: The other things that we look at is what kind 228 00:09:32,200 --> 00:09:35,800 Speaker 2: of hiring did they do for the holiday season, And 229 00:09:35,840 --> 00:09:37,400 Speaker 2: a lot of their hiring has been a lot weaker 230 00:09:37,480 --> 00:09:39,760 Speaker 2: than what you typically see. Again, a sign that the 231 00:09:39,800 --> 00:09:41,880 Speaker 2: consumer is really starting to weaken. 232 00:09:41,960 --> 00:09:43,720 Speaker 1: Here, Tolson Sluck, I want to come back to you 233 00:09:43,800 --> 00:09:45,600 Speaker 1: twenty twenty two. You speak to an official of the 234 00:09:45,600 --> 00:09:48,520 Speaker 1: Federal Reserve, and you'd hear this in various different ways 235 00:09:48,640 --> 00:09:51,280 Speaker 1: on repeat, the risk of doing too little at waste, 236 00:09:51,320 --> 00:09:53,160 Speaker 1: the risk of doing too much. As we get to 237 00:09:53,200 --> 00:09:55,760 Speaker 1: the end of twenty twenty three, Torston from the FEDS perspective, 238 00:09:56,040 --> 00:09:57,679 Speaker 1: has that assessment changed, And. 239 00:09:57,720 --> 00:10:00,160 Speaker 4: I think the minutes just today exactly spelled out that 240 00:10:00,200 --> 00:10:03,840 Speaker 4: they are still very worried about not getting inflation quite 241 00:10:03,880 --> 00:10:06,920 Speaker 4: yet under control. I think that the big difference between 242 00:10:07,000 --> 00:10:08,880 Speaker 4: how the Fed looks at things and the market looks 243 00:10:08,880 --> 00:10:11,120 Speaker 4: at things is that the market is saying, oh, well, 244 00:10:11,200 --> 00:10:14,000 Speaker 4: inflation is indeed coming back to two percent, whereas the 245 00:10:14,040 --> 00:10:17,160 Speaker 4: FED is actually saying in the Minutes yesterday, we need further. 246 00:10:16,960 --> 00:10:19,640 Speaker 3: Evidence to be convinced that we are on the road 247 00:10:19,760 --> 00:10:20,600 Speaker 3: back to two percent. 248 00:10:20,920 --> 00:10:22,640 Speaker 4: So in that sense, the FAT wants to be one 249 00:10:22,720 --> 00:10:26,439 Speaker 4: hundred percent sure that inflation is completely under control and 250 00:10:26,480 --> 00:10:29,160 Speaker 4: it's completely at the two percent level where their target 251 00:10:29,240 --> 00:10:31,920 Speaker 4: is before they begin to declare victory. And I think 252 00:10:31,960 --> 00:10:34,960 Speaker 4: the market is under estimating the FET's commitment to getting 253 00:10:34,960 --> 00:10:36,760 Speaker 4: inflation all the way back to two percent. 254 00:10:36,960 --> 00:10:39,160 Speaker 1: So you're pushing back against the right cuts that are 255 00:10:39,200 --> 00:10:42,559 Speaker 1: priced for twenty twenty four. That's the torst and slog 256 00:10:42,600 --> 00:10:45,160 Speaker 1: forew over apollo, Larry Adam, I need to know to 257 00:10:45,240 --> 00:10:47,720 Speaker 1: understand from your perspective whether that matters to an equity 258 00:10:47,760 --> 00:10:50,480 Speaker 1: call for next year. I two calls a mention before 259 00:10:50,520 --> 00:10:52,760 Speaker 1: we went to commercial break. One was from rbsay five 260 00:10:52,800 --> 00:10:55,200 Speaker 1: thousand points year ran next year on the SMP, the 261 00:10:55,280 --> 00:10:58,640 Speaker 1: other from Bank of America Savita Subromani and bullish. Because 262 00:10:58,640 --> 00:11:01,080 Speaker 1: of this bull it's not because we expect the FED 263 00:11:01,160 --> 00:11:05,200 Speaker 1: to cut, but because of what the FED is already accomplished. Larry, 264 00:11:05,200 --> 00:11:07,000 Speaker 1: how would you address that one. 265 00:11:06,760 --> 00:11:08,839 Speaker 2: So I think that that you're going to see a 266 00:11:08,920 --> 00:11:11,839 Speaker 2: period of consolidation. I'm not disagreeing that the markets can 267 00:11:11,920 --> 00:11:14,440 Speaker 2: go higher next year, but I think in the near term, 268 00:11:14,559 --> 00:11:16,440 Speaker 2: the market's priced in a lot of good news. So 269 00:11:16,480 --> 00:11:18,800 Speaker 2: for example, when you talk about the markets priced in 270 00:11:19,160 --> 00:11:21,800 Speaker 2: four interest rate cuts for next year, we think there's 271 00:11:21,880 --> 00:11:23,880 Speaker 2: only going to be two. When you look at the 272 00:11:23,960 --> 00:11:27,920 Speaker 2: earnings forecast for next year, consensus is like two forty four. 273 00:11:28,320 --> 00:11:30,560 Speaker 2: We're more in a tread water type of environment where 274 00:11:30,559 --> 00:11:33,040 Speaker 2: we think it's two twenty to twenty five. When you 275 00:11:33,080 --> 00:11:36,520 Speaker 2: look at the recession, the consensus is looking for our 276 00:11:36,520 --> 00:11:38,720 Speaker 2: soft landing. We think we have a mild recession. And 277 00:11:38,720 --> 00:11:41,520 Speaker 2: then the other thing it's very important is that you 278 00:11:41,600 --> 00:11:44,280 Speaker 2: really can't keep rallying on the same news. And what 279 00:11:44,320 --> 00:11:46,720 Speaker 2: I mean by that is that inflation is clearly, in 280 00:11:46,760 --> 00:11:49,960 Speaker 2: my opinion, on its doward trajectory. But we can't keep 281 00:11:50,080 --> 00:11:52,360 Speaker 2: rallying every time we get another number that just continues 282 00:11:52,400 --> 00:11:54,160 Speaker 2: to show that. So I think there's going to be 283 00:11:54,200 --> 00:11:56,040 Speaker 2: some challenges here in the near term. And the fact 284 00:11:56,080 --> 00:11:58,480 Speaker 2: that a lot of these people are turning so optimistic, 285 00:11:58,720 --> 00:12:00,520 Speaker 2: to me, that's a contrarian signal to be a little 286 00:12:00,520 --> 00:12:02,800 Speaker 2: bit more cautious, at least here in the near term. 287 00:12:02,840 --> 00:12:05,400 Speaker 1: And Larry, what does caution look like for you? How 288 00:12:05,400 --> 00:12:06,880 Speaker 1: do you express that in markets? 289 00:12:07,280 --> 00:12:09,640 Speaker 2: Well, I think it's all about selectivity the sectors that 290 00:12:09,679 --> 00:12:12,040 Speaker 2: we like I'd mentioned to you earlier. I still think 291 00:12:12,040 --> 00:12:14,160 Speaker 2: you can stick with technology because even if we do 292 00:12:14,200 --> 00:12:16,720 Speaker 2: have that mild recession, I think the earnings growth will 293 00:12:16,720 --> 00:12:19,960 Speaker 2: hold up there. You got to look at specific areas 294 00:12:20,000 --> 00:12:22,680 Speaker 2: where there's a catalyst. I look at valuations in the 295 00:12:22,720 --> 00:12:25,000 Speaker 2: two places I would look there are energy because I 296 00:12:25,040 --> 00:12:28,319 Speaker 2: do think that energy prices will ultimately move higher over 297 00:12:28,360 --> 00:12:30,720 Speaker 2: the next six to twelve months and that'll help that sector. 298 00:12:31,040 --> 00:12:32,800 Speaker 2: And then I do think financials. They are doing so 299 00:12:33,000 --> 00:12:36,360 Speaker 2: much bad news built into financials on the back of 300 00:12:36,400 --> 00:12:40,080 Speaker 2: what's happening in the regional bank space potentially, But regional 301 00:12:40,120 --> 00:12:43,360 Speaker 2: banks make up a very small component of the SP 302 00:12:43,400 --> 00:12:45,480 Speaker 2: five hundred's less than a percent, so I think you 303 00:12:45,559 --> 00:12:48,760 Speaker 2: got to worry about that big headlines, but ultimately how 304 00:12:48,800 --> 00:12:52,000 Speaker 2: they impact the respective markets that we're looking at. 305 00:12:51,920 --> 00:12:53,920 Speaker 1: I'm not sure what would have these banks at this point. 306 00:12:54,040 --> 00:12:56,840 Speaker 1: It's been a difficult year. Larry, appreciate your time. Larry 307 00:12:56,840 --> 00:12:59,400 Speaker 1: Adam Towson's slot tip at the best. Happy Thanksgiving, Chentce 308 00:13:00,040 --> 00:13:02,440 Speaker 1: of thirst like appreciate it. Thank you, thank you.