1 00:00:00,120 --> 00:00:18,439 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:14,840 --> 00:00:18,480 Speaker 2: Single best Idea on an Interesting Monday, as well, a 3 00:00:18,560 --> 00:00:21,760 Speaker 2: nice eclectic set of guests, as we all recovered from 4 00:00:22,239 --> 00:00:27,160 Speaker 2: brackets blown up. Richard Truman, you know our producer. He's 5 00:00:27,160 --> 00:00:29,440 Speaker 2: the one leading the charge here at Team Surveillance with 6 00:00:29,520 --> 00:00:33,760 Speaker 2: a sprightly bracket, to say the least. Leading the charge 7 00:00:33,800 --> 00:00:37,840 Speaker 2: today on equity Discussion Stock market Discussion was liz Anne 8 00:00:37,840 --> 00:00:42,280 Speaker 2: Sanders at Charles Schwab. She was absolutely brilliant in parsing 9 00:00:42,360 --> 00:00:47,800 Speaker 2: out price to earnings ratio, the numerator and the denominator. Here, 10 00:00:47,840 --> 00:00:49,159 Speaker 2: liz Ane Sanders, you. 11 00:00:49,159 --> 00:00:51,839 Speaker 3: Have to segment it. You're still in the mid to 12 00:00:51,920 --> 00:00:55,600 Speaker 3: high twenties for Tech or the Magnificent seven. Then you 13 00:00:55,720 --> 00:00:58,160 Speaker 3: get closer to twenty. We've come down from about a 14 00:00:58,160 --> 00:01:01,640 Speaker 3: twenty two for Multiple about twenty. Then you can go 15 00:01:01,800 --> 00:01:05,120 Speaker 3: equal weight or S and p xmag seven and you're 16 00:01:05,160 --> 00:01:06,240 Speaker 3: into the teens there. 17 00:01:06,280 --> 00:01:07,080 Speaker 4: So it really. 18 00:01:06,840 --> 00:01:09,680 Speaker 3: Depends on how you segment thing. The problem is that 19 00:01:09,720 --> 00:01:14,720 Speaker 3: we've had a declining numerator and a declining denominator. As 20 00:01:14,760 --> 00:01:17,120 Speaker 3: I mentioned, I think we need to see stability in 21 00:01:17,160 --> 00:01:19,959 Speaker 3: the denominator part of the equation to provide a little 22 00:01:20,000 --> 00:01:22,679 Speaker 3: bit of a lift from evaluation perspective. We're not quite 23 00:01:22,680 --> 00:01:23,160 Speaker 3: there yet. 24 00:01:23,440 --> 00:01:27,680 Speaker 2: Absolutely brilliant bronze it. Here's the way it works, folks. 25 00:01:28,280 --> 00:01:30,480 Speaker 2: Any given ratio, I don't care what it is in 26 00:01:30,520 --> 00:01:32,800 Speaker 2: the case of the vanilla price to earnings ratio, but 27 00:01:32,840 --> 00:01:36,240 Speaker 2: it can be priced to cash flow whatever. There's a numerator, 28 00:01:36,360 --> 00:01:39,760 Speaker 2: the number up top and the denominator of the number 29 00:01:39,800 --> 00:01:42,960 Speaker 2: down below, and they each have two ways that can 30 00:01:43,000 --> 00:01:44,880 Speaker 2: go well. They can stay stable, but for the point 31 00:01:44,920 --> 00:01:48,480 Speaker 2: of discussion, the numerator can go up or down. The 32 00:01:48,560 --> 00:01:51,680 Speaker 2: denominator can go up or down, which means you have 33 00:01:51,760 --> 00:01:55,800 Speaker 2: four outcomes, and instead what you're in the media constantly 34 00:01:55,880 --> 00:02:00,800 Speaker 2: is a single static number. Analysis pros likely Zan Saunders 35 00:02:00,800 --> 00:02:03,960 Speaker 2: are always looking at the dynamics. You'll hear the phrase 36 00:02:04,040 --> 00:02:09,200 Speaker 2: partial differentials, which is fancy calculus. Talk about the movement 37 00:02:09,320 --> 00:02:13,920 Speaker 2: of those four outcomes in the numerator and in the denominator. 38 00:02:14,440 --> 00:02:17,480 Speaker 2: With us today, Joe Lavarren, you have SMBC Nico, Joe 39 00:02:17,560 --> 00:02:21,480 Speaker 2: with his experience with Lawrence Cudlow in the first Trump administration. 40 00:02:22,200 --> 00:02:25,280 Speaker 2: Joe lavarn talking here about the unemployment rate. 41 00:02:25,440 --> 00:02:27,480 Speaker 4: We tend not to look at other economists in part 42 00:02:27,520 --> 00:02:29,760 Speaker 4: because we don't want to be biased, but to get 43 00:02:29,800 --> 00:02:33,040 Speaker 4: a higher rate, tom we'd have to be really pessimistic 44 00:02:33,080 --> 00:02:37,280 Speaker 4: on growth. Also, to Oakin's law is useful, which is 45 00:02:37,280 --> 00:02:39,000 Speaker 4: that you know what Oakins law is, but it's the 46 00:02:39,040 --> 00:02:43,200 Speaker 4: relationship between potential GDP and what actually happens in the economy. 47 00:02:43,639 --> 00:02:45,680 Speaker 4: And the other thing is this is that even if 48 00:02:45,720 --> 00:02:47,519 Speaker 4: we had a slow period of growth this year, maybe 49 00:02:47,520 --> 00:02:49,720 Speaker 4: you talked earlier about the pain, Yes, we're gonna have 50 00:02:49,760 --> 00:02:53,480 Speaker 4: somewhat of a pullback on the fiscal side. Secretary Besset 51 00:02:53,480 --> 00:02:56,080 Speaker 4: mentioned detox. But if all of a sudden it looks 52 00:02:56,120 --> 00:02:59,960 Speaker 4: like twenty twenty six is going to accelerate, financial editions 53 00:03:00,160 --> 00:03:03,080 Speaker 4: leads in anticipation of that, hopefully there'll be some clarity 54 00:03:03,080 --> 00:03:05,840 Speaker 4: on the tax side, and companies wouldn't lay people off, 55 00:03:05,880 --> 00:03:07,680 Speaker 4: so there'd be no reason for the underpoint rate to 56 00:03:07,760 --> 00:03:10,600 Speaker 4: rise if the twelve month forward was improving. 57 00:03:10,919 --> 00:03:15,360 Speaker 2: Joelivern SMBC there, and I really want to mention a 58 00:03:15,440 --> 00:03:17,880 Speaker 2: research shout of side research that came out to a 59 00:03:18,000 --> 00:03:23,000 Speaker 2: Torsten Slock at Apollo Global with a blistering two paragraphs 60 00:03:23,200 --> 00:03:27,079 Speaker 2: modeling out what we're all observing. Whatever your politics is, 61 00:03:27,120 --> 00:03:33,400 Speaker 2: the decline in immigration. At Apollo Global Management, they model 62 00:03:33,480 --> 00:03:36,880 Speaker 2: out a new run rate of sixty thousand and six 63 00:03:36,880 --> 00:03:41,960 Speaker 2: to zero on non farm payrolls. That is a shocking number, 64 00:03:42,000 --> 00:03:45,240 Speaker 2: bringing it down from the conventional one fifty down to 65 00:03:45,320 --> 00:03:48,440 Speaker 2: maybe one twenty and now well below one hundred thousand 66 00:03:48,440 --> 00:03:51,880 Speaker 2: per month on non farm payrolls. That is just amazing. 67 00:03:51,960 --> 00:03:56,560 Speaker 2: Two paragraphs on the changing of America. 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