Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Jeffrey Curry
Speaker 2: joins US, Professor of price theory at the University of Chicago,
Speaker 2: Acts a small firm downtown. Great interview yesterday, John Farrell,
Speaker 2: mister Solomon. It was like, you know, it was like
Speaker 2: piercing is like you know, I mean, I mean, you
Speaker 2: know Curry Lip Versailles with his energy Now. Yes, Jeff
Speaker 2: Curry joins US now Energy Pathways, the Carlisle groupie roots
Speaker 2: for the Baltimore Orioles. Jeff Copper, I got to rip
Speaker 2: up the script here. We're not doing oil, We're doing
Speaker 2: Copper twenty eleven twenty two, and now another surge way
Speaker 2: out over three standard deviations. What's different this time with
Speaker 2: a surging copper.
Speaker 3: One the investors have finally bought into the view that
Speaker 3: China is not the only game in town for copper.
Speaker 3: That's the main thing is people finally wrapped their heads
Speaker 3: around yes, the property market in China can sync and
Speaker 3: you can still be long copper, and positioning is full
Speaker 3: force right now. And I think that if you look
Speaker 3: at what's different now, it's the willingness of the investor
Speaker 3: to embrace this market despite the fact that there's a
Speaker 3: weak property market. And that's what happened in twenty one
Speaker 3: in those other time periods that you were talking about,
Speaker 3: as people started buying into it, then all of a sudden,
Speaker 3: the property market weakened, They got too scared and you know,
Speaker 3: pulled out of the position. I think there's a couple
Speaker 3: things that make this different. It's one they've now seen
Speaker 3: that copper demand can rise in the face of a
Speaker 3: declining property market. It's up six percent right now in
Speaker 3: a very weak property market. But also they've seen that
Speaker 3: the government's willing to spend infrastructure on green gapbacks, so
Speaker 3: there's a lot different.
Speaker 2: Is there a utility overlay? As we see utility surge
Speaker 2: because of electricity buildout, does copper go up with the
Speaker 2: AI enthusiasm.
Speaker 3: One hundred percent? You know? And you know, I'd like
Speaker 3: to say, you know, AIS, you know, chips and copper.
Speaker 3: You need the chips, but then you need the electrical
Speaker 3: wiring to be able to power those chips. In one
Speaker 3: of those chips, the video chips, the GPUs consume as
Speaker 3: much power as the average American household. So you're gonna
Speaker 3: need a lot of grid connection to be able to
Speaker 3: accommodate that type of growth. And you know what is
Speaker 3: the bottleneck for that? It's copper. So all roads lead
Speaker 3: to copper, whether if it's military, spin, AI, data centers,
Speaker 3: Green Capex, they all point to copper.
Speaker 4: I mean, you couldn't have copper in a million years.
Speaker 5: I would have guessed it. So what do I know?
Speaker 4: But so there's the demand side of the equation. Jeff,
Speaker 4: you just highlighted a number of sources of demand. Can
Speaker 4: you explain to us kind of the supply side of copper.
Speaker 4: I don't know anything about this. Where does copper come from?
Speaker 5: And how's the supply?
Speaker 3: It's one of the last of the good old fashioned commodities.
Speaker 3: You got to dig out of the ground. You know,
Speaker 3: think about oil, with shale manufacturing, aluminum manufacturing. You know,
Speaker 3: you got to go out to very remotely located, geographically
Speaker 3: restricted places like Chile, Peru, the DRC, Mongolia. It's only
Speaker 3: located in a few places around the world, throwing Zombia
Speaker 3: in that and a lot of those places are incredibly
Speaker 3: difficult to get into. Then you got to dig and
Speaker 3: dig deep. Your or grades have come down. It can
Speaker 3: be anywhere from twelve you know, you take you know,
Speaker 3: ivan Ho's big mine in the DRC. It took twenty
Speaker 3: six years to bring online, so you know, there is
Speaker 3: a big commitment to be able to get the supply online,
Speaker 3: and you have strong demand. And everybody's been sleep walking
Speaker 3: into this, even though they've been told about it. You know,
Speaker 3: we started calling copper the new oil back in twenty
Speaker 3: twenty one and it rang on daf ears. You know,
Speaker 3: now it's finally people are perking up to the story.
Speaker 3: But it's going to take years to bring this up.
Speaker 2: I've been medicated. Paul, ask one more question, and then
Speaker 2: I got to do microeconomics with Professor Kurr.
Speaker 4: All right, So while we have you, Jeff here, it
Speaker 4: talked to us about oil here. I mean, I'm looking
Speaker 4: at I like to quote WTI crew to oil.
Speaker 5: I'm an American.
Speaker 4: I love the guys down in Texas and Oklahoma and
Speaker 4: all those crazy people seventy nine dollars a barrel here.
Speaker 4: What's driving oil these days? Is it supply? Is a demand?
Speaker 5: What are you focusing on?
Speaker 3: You know, all the commodities are being driven by the
Speaker 3: same demand for uces. It's late cycle business cycle in
Speaker 3: the sense that you can think of twenty twenty two
Speaker 3: and twenty twenty three as being your classic mid cycle
Speaker 3: pause where your raise rates, higher energy prices, the system
Speaker 3: slowed down, a regathered scheme consolidated around the higher rates,
Speaker 3: and now we're chugging back off into the second half
Speaker 3: of the business cycle. That's when you want to own
Speaker 3: oil and commodities. And it's about the level of demand
Speaker 3: stressing the inability to supply. That's why all of these
Speaker 3: markets are going up. You know, the vast majority of
Speaker 3: them are in backwardation. You know, it's all your typical,
Speaker 3: you know, into cycle type of bullish structure that's playing
Speaker 3: out here. And I don't see this oil being any
Speaker 3: different than copper or some of.
Speaker 2: The base medals. And now folks Drivetime America early in
Speaker 2: the morning, your microeconomics segment, Jeff Curry, we just were
Speaker 2: honored to have Richard portis a giant of English economics
Speaker 2: in London Business School in our and you know, he
Speaker 2: was kind enough to give us a story about studying
Speaker 2: under John Hicks a few years ago. I want to
Speaker 2: talk about going back to copper into China and all
Speaker 2: the emotion, Jeff Curry, is this a shift in demand
Speaker 2: along the curve or an outright shift of the curve
Speaker 2: that has a permanence.
Speaker 3: The outright shift in the curves permanence, and think about
Speaker 3: how much of that's occurred since twenty twenty one? Military
Speaker 3: the military spin, you know, whether if it is munitions
Speaker 3: in the US to the two to ninety five billion
Speaker 3: dollars one hundred billion dollars in places like Germany, and
Speaker 3: then you throw in the AI data centers on top
Speaker 3: of that. That's on all an outward shift in the
Speaker 3: demand curve. So you know that's going to lead to
Speaker 3: structurally higher prices. And I think the question is why
Speaker 3: will it lead to structurally higher prices because somebody's going
Speaker 3: to have to be crowded out here. There's not enough
Speaker 3: supply to go around to everyone, and so we're going
Speaker 3: to find out where demand destruction actually occurs.
Speaker 2: Jeff Curry, thank you so much. That segment of microeconomics
Speaker 2: with Bloomberg Surveillance, brought to you by the George Stiegler Foundation, Chicago.
Speaker 2: Jeff Curry, thank you so much. With Carlisle there squeeze
Speaker 2: a three hour conversation into eight minutes with Adam Posen
Speaker 2: the Peterson Institute. Adam, thank you wonderful to catch up
Speaker 2: with you. And I've got to go to an essay
Speaker 2: off of one of my heroes, Maurice Obsfeld, writing about
Speaker 2: Trump's plan for the FED would revive nineteen seventies style inflation.
Speaker 2: Are we close to returning to the ugly inflation of
Speaker 2: our ute?
Speaker 6: We may be only a year away from our ute?
Speaker 6: Tom joking aside. I think Mariy has it right that
Speaker 6: if they talk about driving down the dollar for reasons
Speaker 6: of a trade episode which doesn't matter, or putting on
Speaker 6: import surcharges, all this Nixon economic policy channeling from the
Speaker 6: early seventies and making the US undependable in global markets
Speaker 6: and in global institutions, that's inflationary. Maria is right, and
Speaker 6: we're going to be following that up for Peterson with
Speaker 6: other studies.
Speaker 2: I want to get this in because Paul's got a
Speaker 2: bunch of questions. I can't say enough about what Fred
Speaker 2: Bergston invented and what Adam Posen has driven forward. Obviously
Speaker 2: Olivier Blanchard there with all of his good work, But
Speaker 2: there's a guy that wrote a paper that was hugely
Speaker 2: influential for me decades ago. His name is William Klein,
Speaker 2: and his basic message, folks, was stop worrying about China, US, Japan, US, Australia, US,
Speaker 2: in that it's a diffuse system of currency movements off
Speaker 2: of William Klein Adam Posen. As we ax about Japan
Speaker 2: and their depreciation or devaluation, how does it diffuse in
Speaker 2: a William Klein way across a Pacific.
Speaker 6: Rim Well, I think what Bill Klin was saying years
Speaker 6: ago is even more true now. The dollar is dominant
Speaker 6: in reserves, the dollar is dominant for so many things,
Speaker 6: but in terms of the effect of any bilateral exchange
Speaker 6: weight on real outcomes, it's very small. For anyone who's
Speaker 6: not the US. I mean putting it this day. Sorry
Speaker 6: I phrase that badly. But if Japan depreciates by a
Speaker 6: huge amount, which there's no particular reason it should, then
Speaker 6: it actually doesn't matter that much to the US. What
Speaker 6: starts causing concern is in a situation like now, where
Speaker 6: the FED is tipped to keep hiking potentially, where US
Speaker 6: growth is tipped to outperform potentially, and Europe, Japan, China,
Speaker 6: others are all go lower, then you've got an overall
Speaker 6: appreciation of the And that's a different story.
Speaker 2: I bring this up, Paul. It's so crucial because the
Speaker 2: media is so fixated on US this, US that, and
Speaker 2: it's a much more complex economics than what's portrayed in
Speaker 2: the modern media.
Speaker 5: Paul, Adam.
Speaker 4: We had this PPI data today, Adam came in, you know,
Speaker 4: hotter than expected, which is kind of goes to that
Speaker 4: narrative that inflation is not whipped.
Speaker 5: Inflation is still out there.
Speaker 4: How do you think about inflation in this US economy
Speaker 4: these days?
Speaker 6: Well, Paul, I've been and you've heard had me on before.
Speaker 6: I've been in the camp suggesting that the inflation was
Speaker 6: going to be moving sideways on a multi month average
Speaker 6: this year, once you got down into the low threes,
Speaker 6: and that's what's happening. One month's PPI one way or
Speaker 6: the other doesn't really tell you anything. More importantly, the
Speaker 6: Fed needs to talk about what its forecast is and
Speaker 6: what its goals are. And but for people trying to
Speaker 6: assess inflation, yeah, we're stuck it around three percent inflation.
Speaker 6: I would expect headline CPI to go down a bit
Speaker 6: more in the next few months and then come back
Speaker 6: up a bit.
Speaker 4: So given that backdrop, Adam, what do you think our
Speaker 4: Federal Reserve should do over the.
Speaker 5: Coming months here as we head into an election.
Speaker 6: I think they should hold off on any rate cuts
Speaker 6: until at least November, barring something strange happening like a
Speaker 6: financial problem or a cratering of the really Connie, which
Speaker 6: I find extremely unlikely. I think they should be prepared
Speaker 6: and laying the groundwork for raising rates in twenty twenty five.
Speaker 6: And I think they should be looking at and arguably
Speaker 6: talking about the fact that either they're going to change
Speaker 6: the inflation target and move it up, or if they
Speaker 6: don't want to do that, they need to explain why
Speaker 6: they're comfortable with inflation staying around where it is for
Speaker 6: a while. They can't just keep hoping that someday they'll
Speaker 6: get to change the target. But they don't have to
Speaker 6: talk about.
Speaker 4: It now, So all right, Adam. So one of the
Speaker 4: key drivers, obviously for the Federal Reserve is just.
Speaker 5: The US consumer.
Speaker 4: Here. We had some home depot results today that were
Speaker 4: a little bit weaker than expected. Of course, we'll hear
Speaker 4: from Walmart tomorrow Thursday after the Thursday with their earnings.
Speaker 5: How do you view the US consumer here?
Speaker 6: I mean, the US consumer is continuing to be quite strong.
Speaker 6: The idea that it's tapering off some versus a year
Speaker 6: ago is not a surprise, given the real income growth
Speaker 6: hasn't been that high, and that people are saving less now.
Speaker 6: So we're coming to a point at which US households
Speaker 6: are probably on average, not going to keep decreasing their savings,
Speaker 6: right and so fine, But the Fed isn't supposed to
Speaker 6: be trying to fine tune the economy, to use an
Speaker 6: old phrase, to we'll recognize and so a little bit
Speaker 6: of slow down in consumption is okay.
Speaker 2: You know, I look at them posing at the real
Speaker 2: yield here, and I think we need to frame it
Speaker 2: with a nominal GDP. The great miscall of the last
Speaker 2: twenty four months. Maybe posts and Bluntchard wrote about this
Speaker 2: are brilliantly calling the third stimulus the Biden stimulus. We've
Speaker 2: all misjudged real GDP, and certainly we've all misjudged nominal
Speaker 2: GDP with a sustained inflation that we've had. You have
Speaker 2: in your head where the real yield needs to migrate
Speaker 2: to to assist business, to assist a belieged housing market.
Speaker 2: Where does a real yield need get to head?
Speaker 6: I think the real yield needs to head where it
Speaker 6: has to hit irrespective of business, and then we'll get
Speaker 6: to and that is flat to up. I think our star,
Speaker 6: the neutral interest rate is going up because we've got
Speaker 6: productivity rising, we've got risk aversion down, we've got division
Speaker 6: in the world with China so less capital inflowing here,
Speaker 6: we've got growth prospects up, we've got fiscal discipline.
Speaker 2: Okay, I got to rip up the scripture because we
Speaker 2: just got time. This is so because we just had
Speaker 2: Vice chair McClaren in here as well, and he agrees
Speaker 2: with that. Imposing that there's a new hour start. How
Speaker 2: do you presume the messaging of the FED teaches us
Speaker 2: that two percent is history.
Speaker 6: So the way they're doing it for now is Paul
Speaker 6: and a couple others are starting to sort of float
Speaker 6: the idea that maybe our star is up for good
Speaker 6: and bad reason. It's mostly good, they claim, And they
Speaker 6: start redoing the dots every couple months, every few months,
Speaker 6: and time, moving up bit by bet that ten year
Speaker 6: projection in your raid projection. But I think it would
Speaker 6: be helpful for them to talk more bluntly about why
Speaker 6: our star might be up, and if our star is up,
Speaker 6: how far that would be. And then additionally they then
Speaker 6: have to confront the fact that if our star is up,
Speaker 6: then their policy isn't as tight as they think it is.
Speaker 2: Have we ever done this before? Have we ever job boned.
Speaker 6: Two point as it was flight of hand in the
Speaker 6: late nineties, didn't really admit it right, So no, there
Speaker 6: hasn't been a public situation because once Bernanki comes in
Speaker 6: and starts talking transparent exactly our stars on the week.
Speaker 2: It Adam, is it Old Testament or New Testament? I mean,
Speaker 2: what's a gospel here? And I don't know, We've never
Speaker 2: done this before, have we? Doctor Posen?
Speaker 6: Probably not doctor Keane, but the fact for means that
Speaker 6: it has to be done. If the Fed just keeps
Speaker 6: telling people that policy is close to write or or tight,
Speaker 6: when financial conditions are loose and our star is rising,
Speaker 6: we're gonna end up with a mistake or a huge surprise,
Speaker 6: one or the other.
Speaker 2: Adam, thank you, Adam posing a Peterson Institute. I can't
Speaker 2: say enough about the importance of their website. Why are
Speaker 2: you one far away? He was at a bank in
Speaker 2: little Rocket, He was daytrich The means the mean stocks
Speaker 2: just we don't have time for this. Joining us in
Speaker 2: studio Congressman Hill of Arkansas, who is one of the
Speaker 2: same voices. Whatever your politics in Washington, the arch matter
Speaker 2: here is Gensler do something. Is it healthy in America
Speaker 2: to have day trading of these stocks? Like Reminiscence of
Speaker 2: a stock Operator in nineteen twenty three.
Speaker 7: You know, Tom's good to be with you and Paul
Speaker 7: when we had this first come up and we had
Speaker 7: Roaring Kitty at his height, I asked, the question, is
Speaker 7: the bulletin bar when you subscribe to a bulletin bar
Speaker 7: on Reddit and people put information out there, is that
Speaker 7: stock research? Is that a recommendation is that is that
Speaker 7: evidence of front running? And I never got an answer
Speaker 7: from the SEC on that.
Speaker 2: Okay, I've got to turn We got got a long
Speaker 2: agenda to talk. It's a two hour interview. Margaret Brennan
Speaker 2: would make it three hours. French Hill in Arkansas. There
Speaker 2: is the idea of terraff of China saying we don't
Speaker 2: want your chicken, or China doesn't want Brazilian chicken. They
Speaker 2: have teriffs that discourage the import of Tyson's Food chicken,
Speaker 2: Arkansas chicken into China. So we're going to turn around
Speaker 2: into one hundred percent tariff on an ev that we
Speaker 2: won't let into the country as well. You're not in
Speaker 2: a swing state.
Speaker 7: Explain this, boy, that's such a good question. This is
Speaker 7: so concerning to me that when we get into this
Speaker 7: across the board tariff approach by either the Biden or
Speaker 7: Trump administration, we recognize that we have an economy that
Speaker 7: we're deeply integrated with China, and the United States have
Speaker 7: deeply integrated economy, so as to use tariff policy really
Speaker 7: backfires ultimately on both countries. I think you're much better
Speaker 7: identifying the technologies you have concerns about in foreign direct
Speaker 7: investment in China and then handle it that way.
Speaker 2: Paul, I remember years ago a lunch where senior officer
Speaker 2: of Tyson's Food explained to me that they figured out
Speaker 2: where they could send the dark meat, and they would
Speaker 2: send the dark meat to China. It's old news. But
Speaker 2: the answer is is the congresstance says, we have relationships
Speaker 2: across many commodities.
Speaker 7: Beaks and claws, beaks and claus go to China.
Speaker 2: Is that right?
Speaker 6: Yes?
Speaker 4: How big is tyson Foods in Arkansas?
Speaker 7: Well, it's one of our biggest corporate partners because Walmart,
Speaker 7: Ties and food Ja behind are three big Northwest Arkansas
Speaker 7: anchor enterprises and their global reach.
Speaker 4: Yeah, it's just extreme. So it is an election year.
Speaker 4: What does that mean for the day to day workings
Speaker 4: of Congress?
Speaker 5: Do you guys have it? I assume you have a
Speaker 5: to do list? How does that impact it?
Speaker 4: By the fact that a lot of it's an election
Speaker 4: year and there's a lot of noise in Washington.
Speaker 7: Well, a couple of weeks ago, Mike Johnson got to
Speaker 7: celebrate his first day as speaker because after passing the Ukraine,
Speaker 7: Israel and Taiwan package, the Foreign Intelligence Surveillance Act, reform
Speaker 7: and reauthorization, and twenty four spending. Those were all things
Speaker 7: we were supposed to do in twenty twenty three. So
Speaker 7: having cleared the decks of those, Paul, I think you'll
Speaker 7: see us move into a campaign mode, which is really
Speaker 7: messaging bills to show the sharp contrast between the Biden
Speaker 7: administration and how Republicans would govern. But there are things
Speaker 7: we have to do. A Farm Bill every five years,
Speaker 7: we authorize the agriculture programs.
Speaker 3: That's up.
Speaker 7: I expect to see that be marked up in the
Speaker 7: House Ad Committee this month, National Defense Authorization Committee, and
Speaker 7: then of course the most important is debating fiscal twenty
Speaker 7: five spending. So those are all on the plate even
Speaker 7: during an election year.
Speaker 4: And of course we have geopolitical issues all over the
Speaker 4: world that has everyone's attention. What's your current thinking or
Speaker 4: what's the current thinking within your house as to what's
Speaker 4: going on in the Middle East and our policy towards Israel,
Speaker 4: policy towards that whole situation.
Speaker 7: Well, our policy towards the Middle East, I think has
Speaker 7: been off track as the Biden administration has really taken
Speaker 7: a page out of the Obama administration, which was to
Speaker 7: coddle Iran. And when you look at this, Iran is
Speaker 7: a partner and everything bad going on in the world today,
Speaker 7: including the invasion of Hamas from Gaza into Israel, and
Speaker 7: they're at the heart of it. And we freed up money,
Speaker 7: we freed them up from sanctions all under the Biden administration.
Speaker 7: House Republicans and a large portion of House Democrats opposed
Speaker 7: that policy. And I think it's at the heart of
Speaker 7: rearming Russia in Ukraine, partnering with China because China buys
Speaker 7: eighty or ninety percent of energy from Iran and therefore
Speaker 7: sending them money, and then they're arming the Houthis that
Speaker 7: have disrupted rid sea trade. So at the heart of
Speaker 7: this axis new access of evil, I think you find
Speaker 7: iron at every step.
Speaker 2: Is there a politeness in Congress right now? Things improved
Speaker 2: from the madness of twelve months ago.
Speaker 7: Well, we have people who are performance artists in Congress,
Speaker 7: and then we have people who are there to help
Speaker 7: govern and drive the agenda and counter the Biden agenda
Speaker 7: if you're rou now.
Speaker 2: But the performance artist just had a boofest. It sounded
Speaker 2: like the British, sounded like Parliament for a way, So
Speaker 2: is there a sea change here. Maybe I think people.
Speaker 7: Look, I think Republicans in Congress want Mike Johnson to
Speaker 7: continue in the speakership. He's doing a good job. And
Speaker 7: let's get through the as you say, Paul, the national
Speaker 7: election in November, let's focus on that. Let's have a
Speaker 7: contrast between what Republicans would do if we expanded our
Speaker 7: majority of the House, took the Senate with or without
Speaker 7: a Biden presidency. I think that's what we should be
Speaker 7: focused on.
Speaker 2: Okay, and we got a problem here. First of all,
Speaker 2: we got Purdue October twenty eighth, and you know, we
Speaker 2: got the Red White Showcase October fourth. But this year
Speaker 2: Arkansas basketball has a different character to it as well.
Speaker 2: They're popping seven million dollars to the guy from Kentucky.
Speaker 2: I mean, Arkansas's playing large year. What's the impact of
Speaker 2: John Calapari coming down and changing Arkansas athletics.
Speaker 7: Well, we're fired up to have him, and we're glad
Speaker 7: he's going to keep his shirt on. Our previous coach
Speaker 7: would always rip his shirt off when we had a victory,
Speaker 7: didn't have enough victories. But we're glad to have him,
Speaker 7: looking forward to him rebuilding our program. But you know,
Speaker 7: my concern about NCAA Sports is where's it going? Yeah,
Speaker 7: with name, image and lightness and paying players and they
Speaker 7: can enter the portal at any time. How do you
Speaker 7: have a relationship if you don't have a contract with people.
Speaker 2: Do you have any understanding that the money that Caliperry
Speaker 2: brings in pays for history professors or banking professors?
Speaker 7: Well? I think I think we know NCAA Sports that
Speaker 7: football does cover a lot of operating expenses at big universities,
Speaker 7: There's no doubt, and sports plays an important role there.
Speaker 7: But I think we're on the cusp of a really
Speaker 7: turning point in college sports when we tried to figure
Speaker 7: out we have these huge contracts with coaches, right, yep,
Speaker 7: but do we have how do we get them the
Speaker 7: players they need to play to deliver on that contract?
Speaker 5: Yep?
Speaker 2: Arkansas Duke November twenty Ninsol. I mean there's a road
Speaker 2: trip that will go down Congress and Hill could join
Speaker 2: us there for our play by play. Yep.
Speaker 7: Yeah, that'll be a play by play, will be the
Speaker 7: ticket to admission exactly.
Speaker 4: Congresstan talked us about the economy in Arkansas. How are
Speaker 4: the people in Arkansas doing?
Speaker 7: You know, the numbering number one thing I hear when
Speaker 7: I'm at home every week is inflation and the impact
Speaker 7: on inflation on small business and families. The second thing,
Speaker 7: which you've picked up on a national basis on your
Speaker 7: show is people are still looking for the talent they
Speaker 7: need in their workplace. So this is one of those
Speaker 7: economies like we don't see very often. And so inflation's
Speaker 7: number one though, there's no doubt about that.
Speaker 2: One minute you have new legislation that you're initiating. Do
Speaker 2: you have a Democrat who's lined up with that? Tell
Speaker 2: us quickly about that new legislation.
Speaker 7: So FIT twenty one. This is creating a regulatory framework
Speaker 7: for digital assets. This would tell the CFTC and the
Speaker 7: SEC how to manage, regulate, and exchange digital assets out
Speaker 7: there in the marketplace. We want America to be top
Speaker 7: in innovation there and right here in New York. Richie
Speaker 7: Torres is a great leader on designing that legislation. Jim
Speaker 7: Hymes and Connecticut has been very helpful. So those are
Speaker 7: both Democrats that have worked hard on it.
Speaker 2: Do you support ETF for bitcoin?
Speaker 7: You know I do, because I think the SEC did
Speaker 7: the story and I think the cash market in alignment
Speaker 7: with the bitcoin market's been demonstrated, so we'll see what
Speaker 7: happens there.
Speaker 2: Congressman Hill, thank you so much. He's a Republican from Arkansas.
Speaker 4: There, ninth generation Arkins visit.
Speaker 5: That is amazing. I can go back.
Speaker 2: Davy Crockett used to come over for dinner, I mean
Speaker 2: Ireland with you to Frendchhill. Thank you so much. Always
Speaker 2: looking for the next challenge here in the Dow up
Speaker 2: thirty six. Julian Emmanuel joined some evercoorp Isi this morning.
Speaker 2: Readjust the bull call right now. Two October's ago death bullmarket,
Speaker 2: the Yardinny move, the Incorpora move October five, six, seven,
Speaker 2: eight months ago, another bull market. Are we still in
Speaker 2: a bull market? We are still in a bull market.
Speaker 1: So if you go back to October twenty two, the
Speaker 1: entire down draft in twenty twenty two, and really the
Speaker 1: other side in twenty twenty three, it was very valuation driven. Okay,
Speaker 1: we understand that the earnings have migrated towards for the
Speaker 1: most part, that's select seven, But at the index level
Speaker 1: the earnings have stayed roughly the same. The thing about
Speaker 1: twenty twenty four, which convinces us that even though we
Speaker 1: think you have a correction in front of you, is
Speaker 1: that the bullmarket has further legs. Is you're actually going
Speaker 1: to see earnings growth for the first time in two years.
Speaker 4: So what did you see in this earning cycle that
Speaker 4: we're just kind of finishing up.
Speaker 5: Now we'll get some retailers this week. It seemed pretty
Speaker 5: good to me.
Speaker 4: There's good earness growth out there.
Speaker 5: It was a bit odd.
Speaker 1: So basically what happened was is that the surprises were
Speaker 1: much larger than expected because revisions went down prior to
Speaker 1: the start of the quarter. There isn't really an explanation
Speaker 1: other than perhaps the message of what was a subpar
Speaker 1: our GDP first quarter. But you're basically on track five
Speaker 1: and a half maybe six percent earnings growth, and from
Speaker 1: our view, that's good. We expect roughly that rate of
Speaker 1: growth throughout the year. But the problem for the markets
Speaker 1: is the market expects that number to be upwards of
Speaker 1: ten percent.
Speaker 2: Has the wall of money moved into support stocks or
Speaker 2: with a five percent money market fun is yet to happen.
Speaker 1: So for us, it has yet to happen. However, the
Speaker 1: key factor here is you've had a revision of behavior. Okay,
Speaker 1: if you can just sit there and get upwards of
Speaker 1: five percent risk free.
Speaker 4: That's not bad.
Speaker 1: And particularly as the debate goes on and the FED
Speaker 1: seems more and more hamstring.
Speaker 5: Can we rip up the script please?
Speaker 2: Rich, thanks so much for this plug. Power. That's a
Speaker 2: Dow JONN stock up seventy percent, game Stop up one
Speaker 2: hundred and thirteen percent, AMC Entertainment up one hundred and
Speaker 2: twenty nine percent. This is not anathema, but the opposite
Speaker 2: of the Edheimen culture. Are you telling me all this
Speaker 2: meme stuff is healthy for our confidence in our financial system?
Speaker 2: Now it's not healthy?
Speaker 1: And frankly, what it is is something the FED looks
Speaker 1: at this and this disturbs them because what it's saying
Speaker 1: is that unbalanced financial conditions are probably still too loose
Speaker 1: to get inflation.
Speaker 2: Respect so far he remembers when they were fruit on
Speaker 2: the buttonwood tree. I mean, he goes back that far.
Speaker 2: Who's a police officer here, Julian Emmanuel.
Speaker 1: As it probably is for the most part, you're you're broker,
Speaker 1: and frankly, there's no stop, there's no problems anymore.
Speaker 2: Good morning, Commonwealth. We thank Commonwealth for their support. Show
Speaker 2: come on list some Mateo's kids are day trading game.
Speaker 2: Stop up? What one hundred and come on, Paul.
Speaker 4: Help, here's tough out there if you're not nimble out
Speaker 4: there on some of these names. All right, let's just
Speaker 4: brought it out a little bit there at Julian small
Speaker 4: Caps standouts. What's a small cap standout on? Why do
Speaker 4: you like them? So?
Speaker 1: What's very interesting, and we were kidding about this before
Speaker 1: the camera turned red, is the concept of quantum analysis.
Speaker 1: And what we found very much is that you have
Speaker 1: a shift around the concept of momentum. Okay, two things
Speaker 1: are going on. Number One, we all know because of
Speaker 1: the mag seven that basically small caps have been for
Speaker 1: the most part of the last two years a funding
Speaker 1: short for active managers. And you know the the is
Speaker 1: it different this time given the fact that the entirety
Speaker 1: of the Russell two thousand market cap is below the
Speaker 1: highest market cap in the S and P five hundred,
Speaker 1: and what we would say is it really isn't different
Speaker 1: this time. And frankly, what you have is a case
Speaker 1: where momentum is starting to shine. So the Rustle two
Speaker 1: thousand is an index peaked believe it or not in
Speaker 1: twenty twenty one. But there's a lot of stocks that
Speaker 1: have made new highs since then, whose earnings are moving
Speaker 1: in the right way. Those in the names we want
Speaker 1: to own, putting a toe hold into our view that
Speaker 1: long term small cap is likely to have a sustained
Speaker 1: multi year period about performance ahead of it.
Speaker 5: What's a momentum miser? Page forty of your decks.
Speaker 1: There we go. So the essentially the opposite of what
Speaker 1: I do.
Speaker 2: I see you laughing at me. Sweeney actually reads the decks.
Speaker 2: I don't.
Speaker 1: There we go, There we go. We'll see eighty pages
Speaker 1: the client's tire by like page sixty or so.
Speaker 2: What's a momentumizer?
Speaker 1: They are stocks that have not made new highs since
Speaker 1: this latest bull market cycle and have downward earnings revisions,
Speaker 1: and it's all a matter of expectations, and if expectations
Speaker 1: are coming down, those are the kind of stocks you
Speaker 1: want to under own, sell short that type of thing.
Speaker 2: Well, I mean, what does Edheimen say about materials? Copper?
Speaker 2: I mean, you know Edheimen remembers an anacon of copper
Speaker 2: was in video of the day? Are we back? Are
Speaker 2: we back to materials?
Speaker 1: I think that's a more mixed view. Right, So the
Speaker 1: question is the question is Is this a result of, you know,
Speaker 1: a supply drag over the course of years. There's certainly
Speaker 1: an element to that. Is it a result of the
Speaker 1: fact that the rest of the world seems to be
Speaker 1: stabilizing economically, perhaps more than we thought. There's an element
Speaker 1: to that. We don't see this sort of woosh type
Speaker 1: reacceleration that justifies this in increase in prices. But then
Speaker 1: there's also the idea that assets are moving to hedge
Speaker 1: and inflation that appears to be more persistent than perhaps
Speaker 1: we thought six months ago.
Speaker 5: So what do we do here?
Speaker 4: How do we think about valuation here? Because we've had
Speaker 4: such a move off those October levels, you know, twenty
Speaker 4: five percent of the sp and more and some other indexes.
Speaker 4: Earnings are good, but I'm not sure they're that good.
Speaker 4: Are we pushing the envelope on evaluation here?
Speaker 1: We are pushing the velope on valuation, which is why
Speaker 1: for us we think the indexes move a little lower
Speaker 1: in the near term.
Speaker 2: Julian, thank you. Let's do it again. This is too
Speaker 2: short a visit. Julian Emmanuel with evercore Isi. This is
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