WEBVTT - Bloomberg Surveillance: A 'Golden Buying Opportunity' 0:00:05.120 --> 0:00:07.119 This is the Bloomberg Surveillance Podcast. 0:00:07.160 --> 0:00:11.080 I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. 0:00:11.280 --> 0:00:15.760 Join us each day for insight from the best and economics, geopolitics, 0:00:15.760 --> 0:00:20.720 finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 0:00:20.960 --> 0:00:25.400 Spotify and anywhere you get your podcasts, and always on 0:00:25.520 --> 0:00:29.880 Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app. 0:00:30.160 --> 0:00:33.519 Right now, our conversation of the day. Synthesizing all this together. 0:00:33.960 --> 0:00:38.159 Torson Stock is chief economist at Apollo Global Management. Torson 0:00:38.159 --> 0:00:41.040 I'm going to pull in here a whole bunch of threads. 0:00:41.440 --> 0:00:45.920 The Bloomberg Financial Conditions Index is showing massive accommodation, and 0:00:46.000 --> 0:00:48.479 yet I look at the old liboard, the news, Sofa, 0:00:48.680 --> 0:00:53.080 sofr and I'm seeing huge restriction within the short term 0:00:53.200 --> 0:00:56.400 paper market tensions on Wall Street and the ill liquidity 0:00:56.480 --> 0:01:00.720 on Wall Street. How urgent is it for the FED 0:01:01.120 --> 0:01:04.320 to make some direction on a March cut or dare 0:01:04.360 --> 0:01:06.920 I even say a January first cut? 0:01:07.120 --> 0:01:09.640 Well, it has a number of different dimensions. First, there 0:01:09.680 --> 0:01:12.160 is a dimension on the real economy. It's clear that 0:01:12.160 --> 0:01:15.800 the FED pivot has eased financial conditions dramatically, and this 0:01:15.880 --> 0:01:17.520 begins to run the risk that we might see a 0:01:17.560 --> 0:01:20.160 repeat of what happened at the citycon Valley Bank. Remember 0:01:20.240 --> 0:01:22.639 Chris Waller just said a few weeks ago the easing 0:01:22.640 --> 0:01:25.320 of financial conditions in Q two that boost the GDP 0:01:25.440 --> 0:01:28.039 growth to five percent in Q three. Could we see 0:01:28.080 --> 0:01:30.520 the same now where the easing of financial conditions after 0:01:30.560 --> 0:01:33.640 the fat pivot might actually be boosting the housing market, 0:01:33.680 --> 0:01:37.039 the label market, services inflation, goods inflation. We are not 0:01:37.240 --> 0:01:39.440 out of the woods when it comes to battling inflation. 0:01:39.520 --> 0:01:42.520 So on the real economy, absolutely, the easing of financial 0:01:42.560 --> 0:01:46.039 conditions is very supportive. There are some issues when it 0:01:46.040 --> 0:01:49.040 comes to the plumbing when the tightness as you're highlighting 0:01:49.360 --> 0:01:51.920 in very short term markets, and the FED for sure 0:01:52.280 --> 0:01:55.880 has to play this difficult talk of wall between do 0:01:55.920 --> 0:01:57.760 we want to ease financial condition on the rial side 0:01:57.920 --> 0:02:00.160 or how much can we ease financial conditions in the 0:02:00.200 --> 0:02:01.720 very front end of the curve. But this is the 0:02:02.000 --> 0:02:04.240 challenge for the FED. At the moment that you're highlighting. 0:02:03.880 --> 0:02:06.440 Torsten, you didn't listen. They didn't respond to the idea 0:02:06.480 --> 0:02:09.000 of financial conditions. They didn't seem to think it mattered 0:02:09.000 --> 0:02:11.040 at all at the last press conference. Why should it 0:02:11.120 --> 0:02:12.960 matter now? I mean we're going to actually hear them 0:02:12.960 --> 0:02:15.720 come back and say, actually, just kidding about that financial 0:02:15.720 --> 0:02:16.520 conditions question. 0:02:16.840 --> 0:02:19.880 Well, they were debating in October and September, well maybe 0:02:19.880 --> 0:02:21.840 financial conditions have done a lot of the work for us, 0:02:22.320 --> 0:02:24.800 and now they're saying, well, maybe financial conditions it doesn't 0:02:24.800 --> 0:02:27.200 really matter because it can fluctuate so much. So I 0:02:27.240 --> 0:02:29.679 still think that it's a little bit inconsistent what they're 0:02:29.680 --> 0:02:31.920 saying when that data dependency, it only talks about the 0:02:31.960 --> 0:02:35.560 real data, whereas the financial conditions impulse. If you take 0:02:35.720 --> 0:02:38.280 the easy and financial conditions that we've had since the 0:02:38.360 --> 0:02:40.880 fit pivot and stuff it into furpose the fed's model 0:02:40.880 --> 0:02:42.960 of the US economy, you will get a boom of 0:02:43.040 --> 0:02:44.880 up to one and a half percent growth over the 0:02:44.880 --> 0:02:47.160 next slevel quarters in GDP. It's going to be very 0:02:47.160 --> 0:02:49.320 supportive as a tailwind to the economic outlook. 0:02:49.360 --> 0:02:52.280 Although we did have Ganadi on earlier of TD securities, 0:02:52.320 --> 0:02:55.239 and he said even with this idea that inflation could 0:02:55.320 --> 0:02:58.320 remain stickier, that we could get this ongoing growth, the 0:02:58.320 --> 0:03:01.040 FED could still cut rates and still be restrictive. Given 0:03:01.280 --> 0:03:02.639 the positive real rate. 0:03:02.960 --> 0:03:03.799 Do you ascribe to. 0:03:03.720 --> 0:03:05.120 That kind of thing or do you think that just 0:03:05.280 --> 0:03:07.600 means many fewer rate cuts going. 0:03:07.400 --> 0:03:08.040 Forward for the Fed. 0:03:08.200 --> 0:03:10.240 I think that's absolutely right that we have. Of course, 0:03:10.280 --> 0:03:11.800 for the better part of the last year, we have 0:03:11.840 --> 0:03:14.760 talked about higher for longer. Now the conversation is more 0:03:14.760 --> 0:03:17.360 restrictive for longer, because they can still be restrictive if 0:03:17.360 --> 0:03:20.360 inflation is coming down, because real interest rates is what matters. 0:03:20.520 --> 0:03:22.960 So if real interest rates are still positive as inflation 0:03:23.040 --> 0:03:26.080 comes down, the fact and according you also gradually begin 0:03:26.200 --> 0:03:29.000 to lower rates. But note also that if you look 0:03:29.040 --> 0:03:32.360 at the outlook for sofa futures, as also Tom was mentioning, 0:03:32.480 --> 0:03:34.720 you still have that the bottom will still be around 0:03:34.760 --> 0:03:37.360 three and a half four percent. So one very important 0:03:37.360 --> 0:03:39.320 conclusion for as an allocation is that we. 0:03:39.280 --> 0:03:40.640 Are not going back to zero. 0:03:40.920 --> 0:03:43.000 We have still higher for longer, in the sense that 0:03:43.040 --> 0:03:45.480 the level of interest rates, the level of the free 0:03:45.560 --> 0:03:48.080 rate on page one in your finance textbook, will be 0:03:48.320 --> 0:03:51.160 significantly higher for the next several years than where it 0:03:51.320 --> 0:03:53.080 was from the period from twosand and eight to twenty 0:03:53.120 --> 0:03:53.440 twenty two. 0:03:53.520 --> 0:03:55.040 Let's try and get to the half of what we're discussing. 0:03:55.120 --> 0:03:58.480 Care the interest rates sensitivity of the US economy exactly. 0:03:58.480 --> 0:03:59.880 And now what we've seen over the last two years 0:03:59.920 --> 0:04:02.440 is rates go up aggressively and not slow down the economy. 0:04:02.800 --> 0:04:04.800 And what you're suggesting is that as rates start to 0:04:04.800 --> 0:04:07.240 come in and financial conditions ease, that the economy picks 0:04:07.320 --> 0:04:09.160 up again. Can you help explain that to people why 0:04:09.280 --> 0:04:11.880 higher rates haven't slowed the economy down but easy find 0:04:11.920 --> 0:04:13.400 financial conditions will boost it. 0:04:13.480 --> 0:04:13.560 Ye. 0:04:13.680 --> 0:04:15.800 But what's very important in that debate, and that's also 0:04:15.920 --> 0:04:17.840 taking place on Twitter and X of course here at 0:04:17.839 --> 0:04:18.600 the moment, is that. 0:04:18.920 --> 0:04:21.200 My lift very critically sophisticate. 0:04:21.320 --> 0:04:25.160 Important to remember that that is significantly a function of 0:04:25.200 --> 0:04:27.640 whether you talk about the interest rate sensitive components of 0:04:27.680 --> 0:04:30.760 GDP or the non interest rate sensitive components of GDP. 0:04:30.960 --> 0:04:33.839 If you split GDP into the cyclical components and the 0:04:33.920 --> 0:04:37.520 non signal components, the main component that is sensitive to 0:04:37.520 --> 0:04:41.080 interest rates is housing. And housing did respond dramatically to 0:04:41.160 --> 0:04:43.719 higher rates. So this whole idea that the economy didn't 0:04:43.760 --> 0:04:46.680 respond to higher rates, that's just completely wrong. Of course, 0:04:46.720 --> 0:04:48.920 the economy responded to rates. It was the interest rate 0:04:48.960 --> 0:04:52.000 sensitive parts that responded to rates going up. Housing started 0:04:52.040 --> 0:04:55.159 slowing down. But the non interest rate sensitive components, in 0:04:55.200 --> 0:04:58.760 this case travel, restaurants, hotels. After COVID had such a 0:04:58.760 --> 0:05:01.520 long tailwind that that more than dominate the slow down 0:05:01.560 --> 0:05:04.440 in the housing market. So splitting that debate away from 0:05:04.520 --> 0:05:07.640 the academic textbook, which we all love, is so important 0:05:07.760 --> 0:05:10.479 because it becomes so critical to think about did the 0:05:11.040 --> 0:05:12.960 parts of the economy that are sensitive to interest rates 0:05:12.960 --> 0:05:16.240 did they actually respond? And absolutely, in particular housing Kapix 0:05:16.600 --> 0:05:18.800 also of COMMERCIALI state things that are sensus of two 0:05:18.800 --> 0:05:22.000 interest rates they did absolutely respond to when interest rates window. 0:05:22.160 --> 0:05:24.520 This is a fantastic explanation. So let's build on it. 0:05:24.600 --> 0:05:26.919 Let's project this out. What are the forecasts now for 0:05:26.960 --> 0:05:28.760 you for GDP in the next couple of quarters. We 0:05:28.800 --> 0:05:31.800 heard from the likes of Max Kanner of HSBC who said, 0:05:31.839 --> 0:05:33.919 the biggest risk right now is that we have to 0:05:33.960 --> 0:05:37.479 reprice rates again higher because exactly of what you're talking about, 0:05:37.480 --> 0:05:38.880 what are you looking for in the data? 0:05:38.960 --> 0:05:41.560 Well, if I type ECFCG on my Bloomberg screen, I 0:05:41.600 --> 0:05:44.040 will see that over the next six months we are 0:05:44.240 --> 0:05:46.520 very close to zero, zero point four and zero point 0:05:46.520 --> 0:05:48.320 five on GDP for Q one and Q two. So 0:05:48.400 --> 0:05:51.160 the consensus answer to your question is GP growth is 0:05:51.200 --> 0:05:54.279 continuously slowing as a result of the fat's campaign of 0:05:54.320 --> 0:05:57.000 hiking rates. The new risk that has emerged is that 0:05:57.040 --> 0:05:59.200 because of the fit pivot, that means that the interest 0:05:59.279 --> 0:06:02.080 rates sensitive components that we're dragging down GDP for the 0:06:02.080 --> 0:06:04.719 better part of last year, they might now begin to rebound. 0:06:04.760 --> 0:06:07.240 Housing most importantly, case SHILLA is now up five percent. 0:06:07.520 --> 0:06:10.120 Case SHILLA is a very important leading indicator for the OEI, 0:06:10.360 --> 0:06:13.520 meaning the shelter components of the CPI, and shelter makes 0:06:13.560 --> 0:06:15.400 up forty percent of the index, So that means that 0:06:15.400 --> 0:06:17.120 if something that makes up forty percent of the index 0:06:17.200 --> 0:06:19.279 is about to rebound, we could come back to that 0:06:19.320 --> 0:06:22.120 discussion about maybe the rates markets we'll have to reprise 0:06:22.240 --> 0:06:24.479 to higher for long gun and more restrictive for longer. 0:06:24.560 --> 0:06:27.320 I just looked at the two year inflation adjusted yield. 0:06:27.320 --> 0:06:29.960 I haven't looked at it since time began Nixon was president, 0:06:30.360 --> 0:06:33.560 and I can use the word never over twenty years, 0:06:33.600 --> 0:06:37.360 the integran, or the duration of a high two year 0:06:37.400 --> 0:06:40.159 real rate, we've never seen. We had a spike in 0:06:40.360 --> 0:06:44.680 eight with a great financial crisis, but these sustained high 0:06:44.839 --> 0:06:49.839 two year real yields are absolutely unprecedented for global Wall Street. 0:06:50.120 --> 0:06:52.120 How unstable are we right now? 0:06:52.279 --> 0:06:54.640 I would say, at least from a fet perspective. If 0:06:54.640 --> 0:06:56.760 you just take the economic textbook out and think about 0:06:56.800 --> 0:06:59.680 what matters, it is absolutely as you're highlighting real rates, 0:07:00.040 --> 0:07:02.080 So real rates being at these levels would tell you 0:07:02.120 --> 0:07:05.520 that we're still in very restrictive territory. So the challenge 0:07:05.560 --> 0:07:07.800 here for the FIT is that they still want to 0:07:07.800 --> 0:07:09.359 have the soft landing, and we all want to have 0:07:09.400 --> 0:07:11.880 the soft landing. That will be the best outcome, of course, 0:07:12.200 --> 0:07:15.679 from so many dimensions. But what is beginning to matter 0:07:15.760 --> 0:07:18.280 is that they have now sucked so much liquidity out. 0:07:18.400 --> 0:07:20.400 We've gotten to a point where we are beginning to 0:07:20.400 --> 0:07:23.440 see some strains in the plumbing that you're highlighting. And 0:07:23.480 --> 0:07:26.840 that's why real rates it has a very significant different 0:07:26.840 --> 0:07:28.960 impact on the long end and what it means for 0:07:28.960 --> 0:07:31.600 the real economy relative to what high real rates means 0:07:31.800 --> 0:07:33.720 for the front end and what it means for financial 0:07:33.760 --> 0:07:34.400 markets as host. 0:07:34.440 --> 0:07:40.920 And this has been an absolute Cameron Dawson joins US 0:07:40.920 --> 0:07:44.600 now chief investment Officer at New Edge Wealth Camic and morning. 0:07:44.400 --> 0:07:46.080 And happy New year, Good morning, Happy nowear are you. 0:07:46.120 --> 0:07:48.080 Sitting on the fence because I'm written this first line 0:07:48.080 --> 0:07:49.800 in your work. It says we could have a scenario 0:07:49.800 --> 0:07:52.160 where both bulls and hairs are right this year, which 0:07:52.160 --> 0:07:52.680 one is it? 0:07:52.880 --> 0:07:55.239 Well, I think that we have to be nimble because 0:07:55.320 --> 0:07:57.160 I believe that there is going to be a scenario 0:07:57.160 --> 0:07:59.800 where you could very easily see people get drawn even 0:08:00.000 --> 0:08:03.160 further into this market. We think positioning is overweight, but 0:08:03.240 --> 0:08:05.560 not quite as is extreme as it was in times 0:08:05.600 --> 0:08:07.480 like twenty twenty one or twenty eighteen. 0:08:07.840 --> 0:08:09.800 So you could see some pain get pulled in. 0:08:10.000 --> 0:08:12.760 But the other reality is that you could see a 0:08:12.840 --> 0:08:16.160 rationalization of the fact that sentiment is very extended and 0:08:16.200 --> 0:08:19.320 that valuations are extended. So it's how you react to 0:08:19.760 --> 0:08:22.640 market rallies or market corrections, I think is how you 0:08:22.760 --> 0:08:23.200 will win. 0:08:23.280 --> 0:08:24.400 In twenty twenty four. 0:08:24.360 --> 0:08:26.520 We mentioned that HSBC. So let's talk about the work 0:08:26.520 --> 0:08:29.000 coming from Max Kentna this morning. Here's this line, biggest 0:08:29.080 --> 0:08:31.760 risk another repricing and rights. Do you agree with. 0:08:31.640 --> 0:08:34.320 That one hundred percent? That's the pain trade. 0:08:34.400 --> 0:08:36.800 The pain trade is that everybody thinks that inflation is 0:08:36.840 --> 0:08:39.880 fully vanquished and then gets surprised if things like oil 0:08:39.920 --> 0:08:43.359 prices move higher. Wages end up being stickier than expected 0:08:43.800 --> 0:08:46.240 rates move higher, and then all of those stocks that 0:08:46.320 --> 0:08:49.240 rerated in the last two months up thirty forty percent 0:08:49.400 --> 0:08:51.080 because now they're not worried about their. 0:08:50.920 --> 0:08:52.000 Balance sheets anymore. 0:08:52.360 --> 0:08:55.000 Balance sheet risk becomes an issue again, and you get 0:08:55.000 --> 0:08:57.120 a reversion of a lot of the names that were 0:08:57.160 --> 0:08:59.360 lower quality that happened to lead at the end of 0:08:59.440 --> 0:08:59.920 last year. 0:09:00.120 --> 0:09:02.839 The modeled out earnings are nine percent ten percent. Dare 0:09:02.880 --> 0:09:06.120 I say double digit eleven percent earnings growth for this year? 0:09:06.400 --> 0:09:08.520 Is that in the price now or is that going 0:09:08.559 --> 0:09:10.640 to develop out in the first half of next year. 0:09:11.040 --> 0:09:12.680 It is in the price now, and I think that 0:09:12.760 --> 0:09:15.240 we always have to think about the path of twenty 0:09:15.240 --> 0:09:17.600 four will be pricing in what actually happens in twenty 0:09:17.640 --> 0:09:20.520 twenty five. So if a recession looks more likely in 0:09:20.559 --> 0:09:22.640 twenty twenty five, that's when you'll start to see those 0:09:22.640 --> 0:09:25.880 earning estements get cut into the out years. The thing 0:09:25.920 --> 0:09:28.440 that's the biggest challenge for us for earning estments in 0:09:28.480 --> 0:09:31.920 twenty four is the expectation that top line growth will 0:09:31.920 --> 0:09:35.840 re accelerate in a year where nominal growth because of 0:09:35.880 --> 0:09:40.160 inflation is expected to decelerate. Can you see that happen 0:09:40.200 --> 0:09:42.920 at the same time where we get less inflation, less 0:09:42.960 --> 0:09:46.040 pricing power, and yet we get a big acceleration in top. 0:09:46.040 --> 0:09:48.320 So away for the romance of Apple and Microsoft. If 0:09:48.320 --> 0:09:51.360 you look at Staples and discretionary and all, you've got 0:09:51.400 --> 0:09:53.640 to model out there, what you go back from a 0:09:53.679 --> 0:09:57.480 six percent wonderment of growth back to four percent revenue growth? 0:09:57.640 --> 0:09:58.600 Yeah, very likely. 0:09:58.640 --> 0:10:01.680 And there are idiots and pockets where you're going to 0:10:01.679 --> 0:10:04.319 see improvement. You know, healthcare had its earnings down almost 0:10:04.360 --> 0:10:07.680 twenty percent last year, that will flip positive this year 0:10:07.800 --> 0:10:10.280 just because of easy comps. So that's where we're trying 0:10:10.320 --> 0:10:14.160 to look outside of just the macro drivers, Staples being 0:10:14.160 --> 0:10:16.280 a great example of one that can't get away from 0:10:16.320 --> 0:10:21.640 this inflationary dynamic, and look instead to the more idiotsyncratic opportunities. 0:10:20.960 --> 0:10:23.199 Our banks to douse syncratic opportunities. And I ask with 0:10:23.320 --> 0:10:25.960 JP Morgan at new record high, Yeah. 0:10:25.840 --> 0:10:27.840 I mean you've seen such a huge rerating. Of course, 0:10:27.840 --> 0:10:31.720 there's pockets of banks where there is still inexpensive areas. 0:10:32.040 --> 0:10:34.080 You know, banks do have the tailwind of a less 0:10:34.280 --> 0:10:38.080 inverted curve, hopefully a reopening of capital markets. But then 0:10:38.120 --> 0:10:40.640 we have to consider things like BTFP, does it get 0:10:40.640 --> 0:10:43.400 re extended Basil three in game, all of these things 0:10:43.440 --> 0:10:46.120 that could be big drivers of bank earnings or at 0:10:46.200 --> 0:10:49.080 least appetite for bank risk as. 0:10:48.920 --> 0:10:50.920 We go through twenty twenty four. It sounds like you're 0:10:50.920 --> 0:10:54.040 not buying the rotation story. I am buying the rotation story. 0:10:54.120 --> 0:10:54.360 Yeah. 0:10:54.559 --> 0:10:56.520 I think that we have to have an open mind 0:10:56.520 --> 0:11:00.640 that even great companies with great balance sheets, with monopolies 0:11:01.120 --> 0:11:05.520 could still underperform simply because positioning is so crowded and 0:11:05.559 --> 0:11:07.320 because valuations are so elevated. 0:11:07.440 --> 0:11:09.920 That's the smartest insight I've heard in the last forty 0:11:09.920 --> 0:11:10.520 eight hours. 0:11:10.559 --> 0:11:13.640 Are we going to have rotation or not? That's a really, 0:11:13.960 --> 0:11:15.960 really undersaid cool question. 0:11:16.000 --> 0:11:17.640 I think that that was really some of the anks 0:11:17.720 --> 0:11:20.160 behind the sell off that we've seen that was living, 0:11:20.520 --> 0:11:22.560 that was really led by big tech. We were talking 0:11:22.600 --> 0:11:25.040 about this yesterday with Apple, and I guess that you know, 0:11:25.080 --> 0:11:27.800 how much does that have legs versus what we saw 0:11:27.960 --> 0:11:28.800 last year, which was. 0:11:28.800 --> 0:11:31.280 A headfake and everyone came in saying, all right. 0:11:31.200 --> 0:11:32.959 This is the year to sell tech, and by the 0:11:33.080 --> 0:11:34.520 end of the year of them was saying in Nvidia 0:11:34.600 --> 0:11:37.040 Magnificent seven, it's going to change the world. Kumba Yah 0:11:37.080 --> 0:11:39.080 it's going to save the United States, I mean, et cetera, 0:11:39.120 --> 0:11:39.559 et cetera. 0:11:39.840 --> 0:11:42.280 And what a different setup because at the very end 0:11:42.280 --> 0:11:43.920 of twenty twenty two you had. 0:11:43.840 --> 0:11:45.839 Record outflows from tech ETFs. 0:11:46.120 --> 0:11:47.960 You look at the course of twenty twenty three, you 0:11:48.000 --> 0:11:52.200 had forty billion dollars of inflows into technology compared to 0:11:52.240 --> 0:11:54.800 twenty billion dollars of outflows out of things like energy 0:11:54.840 --> 0:11:57.920 and financials and healthcare. So really this could just be 0:11:58.000 --> 0:12:00.880 about positioning and pain trades and the fact that you 0:12:01.040 --> 0:12:04.640 already re rated tech because now it's already just one 0:12:04.720 --> 0:12:07.760 turn away from its twenty twenty one peak valuation, so 0:12:07.800 --> 0:12:08.680 you're hitting a ceiling. 0:12:08.920 --> 0:12:10.120 Let's put a couple of stories together. 0:12:10.200 --> 0:12:12.280 You said, maybe the biggest paying trait the risk here 0:12:12.320 --> 0:12:14.720 is high, right, so reprice give rights again at Lisa 0:12:14.720 --> 0:12:16.880 brought up banks. How woud the banks respond to that 0:12:17.120 --> 0:12:19.120 given what we saw last year? 0:12:19.200 --> 0:12:21.480 Yeah, I mean it would raise balance sheet risk again. 0:12:21.679 --> 0:12:25.280 It probably puts into sharp focus again issues with commercial 0:12:25.320 --> 0:12:28.679 real estate because we've all kind of breathed this collective 0:12:28.760 --> 0:12:32.640 sigh of relief that higher for longer is dead if 0:12:32.679 --> 0:12:35.120 it's not dead, and the path of the cost of 0:12:35.200 --> 0:12:37.679 capital instead of the last forty years of being down 0:12:38.080 --> 0:12:41.800 is actually marching slightly higher and in a choppy path. 0:12:42.200 --> 0:12:44.760 Could mean that we have to reprice some of the 0:12:44.840 --> 0:12:46.280 risk in some of these balance sheets. 0:12:46.360 --> 0:12:48.720 Is it just JP Morgan then everyone else? When we 0:12:48.720 --> 0:12:50.440 talk about the banks, is that what we're talking about? 0:12:50.520 --> 0:12:52.160 JP Morgan then everybody else? 0:12:52.240 --> 0:12:54.360 We actually just are looking very deeply at some of 0:12:54.400 --> 0:12:57.600 the regional banks. Some of the regional banks are underpriced. 0:12:57.679 --> 0:12:59.440 We think if we look at the balance sheets, they're 0:12:59.480 --> 0:13:01.640 not as extended as or. 0:13:01.520 --> 0:13:03.520 As issued as some parts of. 0:13:03.679 --> 0:13:06.240 Regional banks that some don't have as much commercial real 0:13:06.320 --> 0:13:09.640 estate exposure, have great presence in their local areas, so 0:13:09.800 --> 0:13:13.000 they're trading at very discounted valuations. If we're going down 0:13:13.040 --> 0:13:16.000 in value, that's one of the areas we're actually looking. 0:13:16.120 --> 0:13:18.560 Yeah, it's somebody at you know, the last five six, 0:13:18.679 --> 0:13:21.280 seven days at JP Morgan's capturing one out of five 0:13:21.440 --> 0:13:26.040 profit dollars in American banking. If that isn't the third 0:13:26.120 --> 0:13:28.600 or fourth or fifth national bank of the United States, 0:13:28.600 --> 0:13:29.440 I don't know what is. 0:13:30.240 --> 0:13:33.480 There is nothing else. It's JP Morgan versus everyone else. 0:13:33.520 --> 0:13:34.480 That's been a story the last year. 0:13:34.520 --> 0:13:35.679 I'll refer to our guests done this. 0:13:35.840 --> 0:13:38.880 But yeah, I mean they're capturing some twenty percent of 0:13:38.920 --> 0:13:40.760 profits according to the source. I'm sorry you don't have 0:13:40.760 --> 0:13:42.199 a source in front of me to side. I think 0:13:42.200 --> 0:13:45.720 it's it's the it's the Bramow newsletter. You know that newsletters. 0:13:45.800 --> 0:13:46.319 It's a muster r. 0:13:46.480 --> 0:13:47.120 It's a muster reader. 0:13:47.200 --> 0:13:48.719 Camic. Thank you got to leave this. It's going to 0:13:48.760 --> 0:13:50.120 catch up. It's going to say a happy new Year, 0:13:50.200 --> 0:13:51.560 Cameron Dawson, the new h. 0:13:51.559 --> 0:14:03.040 Wel let's get right to it. 0:14:03.160 --> 0:14:06.800 This is so important right now. Dan Ives joins us. 0:14:06.840 --> 0:14:10.720 He is a bull on any number of technology companies. 0:14:10.800 --> 0:14:13.200 We wait for him to come out on controlled data 0:14:13.280 --> 0:14:15.480 here and with a birecommendation at some point. 0:14:15.559 --> 0:14:16.760 That's a little bit of history there. 0:14:16.880 --> 0:14:21.200 Dan Ives with webbush Dan, what's a channel check? What 0:14:21.400 --> 0:14:24.880 exactly is a channel check? I just I just don't 0:14:24.920 --> 0:14:25.200 see it. 0:14:26.880 --> 0:14:30.080 Yeah, and look for us in terms of our easier 0:14:30.160 --> 0:14:34.280 supply gene checks, really trying to focus on what demand 0:14:34.400 --> 0:14:37.520 looks like in terms of the suppliers for iPhones. 0:14:38.240 --> 0:14:41.160 There have been no cuts from an iPhone perspective as 0:14:41.200 --> 0:14:43.880 of data, and I think that's that's bullets and ultimately 0:14:44.000 --> 0:14:47.800 that shows demand through howadays season has actually been on part, 0:14:47.920 --> 0:14:49.320 actually better than expected. 0:14:50.200 --> 0:14:52.280 And to me, that's what I focus on rather than 0:14:52.320 --> 0:14:53.480 the haters continue. 0:14:53.160 --> 0:14:56.360 Okay, but data tell Okay, you've been gracious about this, 0:14:56.480 --> 0:15:00.480 and they've been gracious about your twenty twenty three ganormous success. 0:15:00.880 --> 0:15:04.080 But when you do a channel check, are you counting iPhones? 0:15:04.200 --> 0:15:08.120 Are you over in China guessing the manufacturing line? Are 0:15:08.160 --> 0:15:10.800 you in the store on Madison Avenue looking at how 0:15:10.840 --> 0:15:13.880 many people from Lisa's family are buy an Apple loot? 0:15:14.160 --> 0:15:15.280 What's a channel check? 0:15:15.760 --> 0:15:15.920 Yeah? 0:15:16.040 --> 0:15:16.920 All above time. 0:15:16.960 --> 0:15:19.880 I mean, we feel we're in Apple stores around the country, 0:15:19.920 --> 0:15:20.560 around the world. 0:15:21.280 --> 0:15:23.840 We're also talking to suppliers. 0:15:23.360 --> 0:15:26.600 Basically trying to triangulate to what we think units is 0:15:26.680 --> 0:15:29.320 going to look like for the quarter and for the year. 0:15:29.400 --> 0:15:30.440 And that's how we've done. 0:15:30.280 --> 0:15:32.640 It from the beginning, I mean, over the last decades so. 0:15:33.800 --> 0:15:35.880 And it's one of you're always gonna have different opinions. 0:15:35.880 --> 0:15:39.960 You just talk about the Barclays downgrade. We continue to 0:15:40.040 --> 0:15:42.680 stick with our checks. That that has navigated us, you know, 0:15:42.720 --> 0:15:44.880 a lot more right than wrong. I think when you 0:15:44.920 --> 0:15:47.440 look at I from fifty, it's easy to take shots, 0:15:47.720 --> 0:15:50.480 you know, relative to maybe some of the fears out there, 0:15:51.120 --> 0:15:53.560 especially fire and a crowd theater first day at the 0:15:53.640 --> 0:15:58.280 trading you know a year I it's a groundhog day. 0:15:58.560 --> 0:16:01.760 You know, we saw it last year as well. It's underestimated. 0:16:02.360 --> 0:16:06.280 Two hundred and fifty million. Is the install based upgrade 0:16:06.480 --> 0:16:09.920 cycle that's due in that window has an upgrade in 0:16:10.040 --> 0:16:10.880 four years. 0:16:11.480 --> 0:16:13.880 Dan, let's get into it. You mentioned Barkleys, Tom mentioned 0:16:13.920 --> 0:16:15.720 it too. I mentioned this, so let's get to that line. 0:16:16.000 --> 0:16:19.320 The continued period of weak results coupled with multiple expansion 0:16:19.880 --> 0:16:23.040 not sustainable in that it is a statement of fact, 0:16:23.200 --> 0:16:25.240 and then there's an opinion of the end. The statement 0:16:25.280 --> 0:16:27.920 of fact is iPhone cuts. They haven't been great for 0:16:27.960 --> 0:16:28.920 the last twelve months. 0:16:29.480 --> 0:16:30.160 That's the fact. 0:16:30.680 --> 0:16:34.080 Yet it's been coupled with multiple expansion, also a fact. 0:16:34.480 --> 0:16:38.000 The opinion piece is they're saying it's not sustainable. Are 0:16:38.040 --> 0:16:39.520 you suggesting that it is? 0:16:40.840 --> 0:16:44.080 Yeah, So what I'm suggesting is that the next three 0:16:44.160 --> 0:16:47.200 to four quarters you're going to have iPhone growth. You 0:16:47.320 --> 0:16:50.240 have growth coming out in China despite the fears and 0:16:50.480 --> 0:16:53.200 abs are the bare noise, and I think the most 0:16:53.240 --> 0:16:55.840 important thing is services, and I think services is going 0:16:55.880 --> 0:16:59.120 to be teenager type of growth. That's key to the 0:16:59.240 --> 0:17:03.120 multiples Manson story. And then we go into later this year, 0:17:03.160 --> 0:17:05.840 there's gonna be more monization from an AI as we 0:17:06.000 --> 0:17:06.480 talked about. 0:17:06.520 --> 0:17:08.760 That's gonna be the next layer. I think it all 0:17:08.920 --> 0:17:11.520 results and this is gonna be viewed. 0:17:11.320 --> 0:17:13.680 As more of a golden buying opportunity rather than the 0:17:13.840 --> 0:17:16.679 start to hit the elevator exit. 0:17:17.080 --> 0:17:19.840 How much Dan, is your bullish call predicated on this 0:17:20.000 --> 0:17:22.760 idea of rate cuts, the idea of rates coming down 0:17:22.920 --> 0:17:24.040 as much as people think. 0:17:25.200 --> 0:17:30.000 Yeah, look, that's probably five ten percent from multiple perspective. 0:17:30.040 --> 0:17:32.040 I mean, as we saw twenty two to the disaster 0:17:32.640 --> 0:17:36.160 twenty three in terms of now popcorn movement, in terms 0:17:36.160 --> 0:17:38.680 of FED gonna cut in twenty four. Look, it speaks 0:17:38.720 --> 0:17:42.440 to our overall bull tech thesis, right that the soft 0:17:42.600 --> 0:17:45.159 landing Killsberry do a boys soft landing. 0:17:45.680 --> 0:17:48.520 You're starting to see now more and more focus on tech. 0:17:48.880 --> 0:17:49.760 I do think now. 0:17:50.119 --> 0:17:53.080 You know, as Pharaoh's talked about multiple expansion twenty three, 0:17:53.680 --> 0:17:56.080