WEBVTT - ICYMI: Louis Navellier on Earnings Optimism

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business

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<v Speaker 1>Week with Carol Masser and Tim Stenovek on Bloomberg Radio.

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<v Speaker 2>Can I just say I'm exhausted. I want to see

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<v Speaker 2>what Louis Navalier has to say. He has seen his

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<v Speaker 2>share of crises, volatility, market cycles. He's chairman, founder and CEO,

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<v Speaker 2>ce io excuse me of Navalier and associates. And he

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<v Speaker 2>joins us.

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<v Speaker 1>From Rancho, Santa Fe, California.

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<v Speaker 3>Nice. Nice?

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<v Speaker 1>Are you just north of San Diego. I don't even

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<v Speaker 1>know why he's inside right now. He should be outside,

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<v Speaker 1>I know, but it's a beautiful.

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<v Speaker 2>Play and go really, so then you're not worried about

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<v Speaker 2>the market.

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<v Speaker 3>No, no, because I have good earnings and the real

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<v Speaker 3>good earnings kick off next week with Taiwan Semi Conductor,

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<v Speaker 3>although I don't own that stock, but it's a bell weather.

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<v Speaker 3>I think Netflix will probably okay, and then we'll start

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<v Speaker 3>to focus on earnings and I live core or so

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<v Speaker 3>I think there's four months of efficient markets, which is

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<v Speaker 3>earning season, and eight months of mean reversion, and the

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<v Speaker 3>mean reversion season will end soon.

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<v Speaker 2>Wait, okay, so we wait.

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<v Speaker 1>I'm just like this jumb found you. You know what,

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<v Speaker 1>you should have gone and played at golf of a

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<v Speaker 1>game of golf to Carrol because it relaxes you, apparently,

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<v Speaker 1>and everything is fine.

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<v Speaker 2>How do you so, what's your read on Washington? What's

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<v Speaker 2>you read on the president?

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<v Speaker 1>And what you read on tariffs?

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<v Speaker 3>The bond vigilantes are in charge. Obviously they had a

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<v Speaker 3>Scott Best that had meeting with President Trump, and how

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<v Speaker 3>Howard was there our Commerce secretary. Those are both experts

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<v Speaker 3>in treasuries and the bond vigilanities took over, so they

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<v Speaker 3>had to they had to put the ninety day suspension on.

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<v Speaker 2>But so then, what do you think was going on

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<v Speaker 2>in the White House today as we saw a bunch

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<v Speaker 2>of selling.

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<v Speaker 3>I think the bond vigilantes are still in charge. We

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<v Speaker 3>had a thirty year bond auction and we got away

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<v Speaker 3>with it, but the dollars a week Apparently a lot

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<v Speaker 3>of people own our treasuries are net sellers, and they're

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<v Speaker 3>just not as friendly as they used to be. I

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<v Speaker 3>personally think that rates will collapse in Europe and then

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<v Speaker 3>the dollar will get its mojo back. But for the

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<v Speaker 3>short term, these big and soutional bond players are in charge,

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<v Speaker 3>and they allowed our treasure yields to spike, and they

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<v Speaker 3>had to do something, so they put the ninety days

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<v Speaker 3>suspension on.

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<v Speaker 1>Hey, Rich we spoke, I mean, excuse me, Louis, we

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<v Speaker 1>spoke to Rich Weise at American Century Investments. I'm looking

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<v Speaker 1>at my notes here to go back to what he

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<v Speaker 1>told us. He called this uncertainty on steroids. He said

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<v Speaker 1>he's not buying the dips. He said, this downturn is

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<v Speaker 1>more serious than other ones. He called it man made

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<v Speaker 1>in a catastrophe. He was pretty dour. He had warnings,

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<v Speaker 1>it doesn't seem like you have the same sentiment.

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<v Speaker 3>Well, I mean, I'm a quant, I'm a fundamental quant,

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<v Speaker 3>and I will confirm that our models toightened up, and

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<v Speaker 3>the models would like us to be in the top

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<v Speaker 3>five percent. The krem lakrem. The way those models work

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<v Speaker 3>is when the mark goes down five percent, we can

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<v Speaker 3>withstand that. When it goes down twenty, we can't withstand it.

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<v Speaker 3>They throw the baby out with the bath water. But

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<v Speaker 3>fortunately the baby's bounced yesterday. And I mean, you know,

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<v Speaker 3>I Portfolo is up over nineteen percent yesterday, and it

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<v Speaker 3>was a big bounce. I mean, obviously we got spanked today,

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<v Speaker 3>So I feel very confident that when earnings come out,

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<v Speaker 3>things will right itself.

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<v Speaker 2>I mean, you just don't care about do you care

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<v Speaker 2>about backward earnings or you're saying that you are confident

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<v Speaker 2>that the outlooks are going to be good too.

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<v Speaker 3>No, I'm on the outlooks. I don't have analyst cuts.

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<v Speaker 3>I have eighties bocks I own. I do not have

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<v Speaker 3>analyst cuts. I'm not talking about the top down strategists

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<v Speaker 3>of low where they're targets the SMP, and I'm talking

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<v Speaker 3>about the actual analysts that cover the companies. So I'm

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<v Speaker 3>pretty insulated right now, and I'm very comfortable. You know,

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<v Speaker 3>my largest holdings are Navidian super Micro. You saw how

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<v Speaker 3>they bounced. I have a big holding in Lily. Obviously

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<v Speaker 3>it's struggling here with the fear of you know, the

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<v Speaker 3>tariffs on the pharmaceutical ingredients and all. But yeah, this

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<v Speaker 3>could have been rolled out a lot better. Obviously Peter

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<v Speaker 3>Navarro was fighting with Elon and all that stuff, and

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<v Speaker 3>that didn't help. You know. Also, I did notice a

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<v Speaker 3>lot of the negative press was coming from outside America,

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<v Speaker 3>and you know, those markets would gap down and it

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<v Speaker 3>would put us in a pispour mood, and this is

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<v Speaker 3>the previous days. But you know, the good news is

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<v Speaker 3>they they're responding to the market. Who knew that Trump's

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<v Speaker 3>social was one of the best ways to call the market?

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<v Speaker 3>And that's controversial itself.

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<v Speaker 1>Go on with that, What do you mean, well, he.

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<v Speaker 3>Told everybody to buy yesterday morning before the market opened.

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<v Speaker 2>You believe that?

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<v Speaker 3>Yeah, No, he'd be put in print. It was all

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<v Speaker 3>in cap with three x on. No.

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<v Speaker 2>No, I mean I saw that, but I mean, yeah.

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<v Speaker 3>Well, we didn't tell us what to buy. I didn't

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<v Speaker 3>tell us why we should buy cars or houses or stocks.

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<v Speaker 3>You know. So he's not going to get persecuted for

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<v Speaker 3>I know Adam Shiff wants to persecute.

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<v Speaker 1>Him, but.

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<v Speaker 3>You know, it's it's uh. I found that to be

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<v Speaker 3>very interesting, you know.

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<v Speaker 1>Louis, given what we learned in the last twenty seven hours,

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<v Speaker 1>this ninety day pause, does is that just kicking the

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<v Speaker 1>can down the road here? Did he? Why not?

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<v Speaker 3>No? Well, there's two things. First, we're going to have

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<v Speaker 3>a ten percent tariff. Okay, those those are non negotiable.

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<v Speaker 3>And the reason they're doing that is we have a

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<v Speaker 3>big underground economy. So I'm in California where twenty percent

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<v Speaker 3>of people don't have bank accounts, and guess what, you

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<v Speaker 3>either have to put a vat tax on him or tariffs.

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<v Speaker 3>So that's what they're going to do to get more

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<v Speaker 3>tax revenue. As far as the reciprocal tariffs, it looks

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<v Speaker 3>like most countries will you know, Israel's at the standard,

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<v Speaker 3>and but even when they cave, Trump's still trying to

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<v Speaker 3>extract business from them, you know, like, what are you

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<v Speaker 3>gonna buy. You're gonna buy energy, you're gonna buy food.

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<v Speaker 3>What are you gonna buy? And so I think that's

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<v Speaker 3>what's complicating the tariff negotiations is they have to guilt

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<v Speaker 3>you to buy stuff. And so in the end, we

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<v Speaker 3>are going to get a lot of on shoring and

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<v Speaker 3>we are going to have a boom, but we've created

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<v Speaker 3>a tremendous amount of uncertainty. So any company that warns

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<v Speaker 3>okay or a guide's lower is obviously going to get shot.

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<v Speaker 3>And yeah, you said we're going to get a boom.

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<v Speaker 2>So you believe that this trade policy is a good thing.

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<v Speaker 3>Because in the end we're gonna have free or trade

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<v Speaker 3>in the end, except for the ten percent, and obviously

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<v Speaker 3>we're having a fight with China. We're having an economic

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<v Speaker 3>war with China right now.

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<v Speaker 1>That's a that's a pretty big trading partner to have

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<v Speaker 1>a war with. Given that these are one hundred and

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<v Speaker 1>forty five percent tariffs, When do those get resolved?

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<v Speaker 3>I don't think they get resolved. I think you know,

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<v Speaker 3>she's got his own problems in China, you know, and

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<v Speaker 3>he's got a deflation problem, and the Financial Times talked

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<v Speaker 3>about they might have to devalue the currency. Their rates

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<v Speaker 3>are lower than than Japan. The fact they are the

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<v Speaker 3>new Japan. They're losing millions of people a year, they're

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<v Speaker 3>losing households. They got problem after problem after problem. So

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<v Speaker 3>we'll see if cooler heads prevail. But she got rid

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<v Speaker 3>of all the reformers, the ones that were running the

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<v Speaker 3>economy a few years ago. So you know, it's just

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<v Speaker 3>two egos going at it, and they might respect each other,

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<v Speaker 3>but I don't know if they can get it done.

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<v Speaker 2>Hey, Louis, have you been moving any money into like

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<v Speaker 2>Europe and money outside the United States?

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<v Speaker 3>No? No, because I'm expecting the dollar to get its

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<v Speaker 3>mojo back. You know that. In fact, if the dollar

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<v Speaker 3>does get its mojo back, it's going to help squell

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<v Speaker 3>those temper tariffs. You know, you know, but we already

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<v Speaker 3>had a great CPI and we don't see the inflation yet.

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<v Speaker 3>But you know, if I'm a if I'm ordering things,

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<v Speaker 3>I think there's it's chaos right now. And in meantime,

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<v Speaker 3>we've had all these goods dumped on America. I assume

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<v Speaker 3>they're going to discount them and sell them. I mean,

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<v Speaker 3>you know, so I think that the you know, I

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<v Speaker 3>think we'll be okay, but we need some leadership and

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<v Speaker 3>I think we'll get it from our semiconductors and some

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<v Speaker 3>other places. And meantime, we do have an energy problem

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<v Speaker 3>because oil prices are so low, the permium is not

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<v Speaker 3>going to be profitable. So that's going to be interesting development.

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<v Speaker 3>So if I was Trump, I'd start putting oil in

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<v Speaker 3>the strategic patrol and reserve to put a floor under this.

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<v Speaker 3>Because he doesn't he doesn't need a boom bust in

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<v Speaker 3>the oil patch.

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<v Speaker 1>What happens if we do get a boom bust.

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<v Speaker 3>Well, we're already having a bus now. We don't have

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<v Speaker 3>a natural gas problem, we have an oil problem.

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<v Speaker 1>You call this, you call it this a bust right now?

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<v Speaker 3>Yes, because the permium will stop, will stop drilling.

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<v Speaker 2>Yeah, because it's just not profitable, right, like you can't.

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<v Speaker 2>You got to have a certain price in order for

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<v Speaker 2>it to make business.

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<v Speaker 3>H Alberta is hurting. You know, this hurts Alberta. You

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<v Speaker 3>know they have to you know, they have to use

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<v Speaker 3>natural gas to steam the tar sands. So this and

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<v Speaker 3>then now we put we will obviously want to a

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<v Speaker 3>tariff on the Alberta oil. I think it's ten percent.

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<v Speaker 3>So I was actually at our largo when the Alberta

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<v Speaker 3>premieer was there and she was not happy. Okay, this

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<v Speaker 3>is before things escalated. Okay, tell us more. She wasn't happy.

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<v Speaker 3>She's they're sucking up to Trump. She has to because

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<v Speaker 3>that's where the pipelines are. You know, Canada used to

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<v Speaker 3>put oil on trains, but in twenty thirteen one of

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<v Speaker 3>them overturned and wiped out a nice Quebec town and

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<v Speaker 3>killed forty some people. So basically there are there's no

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<v Speaker 3>place for Alberta to ship the oil except America, and

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<v Speaker 3>we have and and now we're putting a little terror

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<v Speaker 3>at least two percent tariff on that.

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<v Speaker 2>Yeah, so Louis, I have to ask we just got

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<v Speaker 2>about I don't know thirty forty seconds here. Wait, you

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<v Speaker 2>said you were at mar A Lago, So were you

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<v Speaker 2>talking with the president?

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<v Speaker 3>No? No, he's president now. When he before he was president,

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<v Speaker 3>he would run around kind of like he's the mater

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<v Speaker 3>d and he was very friendly. But when he is president,

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<v Speaker 3>his area is roped off, and you know, he waves

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<v Speaker 3>to everybody knows who some of us are.

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<v Speaker 1>Were you talking with him before he was president.

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<v Speaker 3>Yes, he'd come in and say hi, but he pretends

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<v Speaker 3>he knows me. I don't think he knows who I am.

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<v Speaker 3>I'm not a member. I guess can invite it a lot.

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<v Speaker 3>I do live in Florida.

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<v Speaker 2>All right, listen, appreciate getting some time with you, and

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<v Speaker 2>I'm sure we'll come back to you in the near future.

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<v Speaker 2>Louis b While Louis Navalier, Chairman, founder and CIO of

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<v Speaker 2>Navalier and Associates.