Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: In October of a number of years ago, Ralph Ankopora,
Speaker 2: the giant of technical analysis, and Edward, you're Denny, with
Speaker 2: all of his synthesis of economics and fundamental analysis, got
Speaker 2: on board this bull market. There was fear on the
Speaker 2: streets and they said go along. It's one of the
Speaker 2: great calls of the modern age. Edward, your Denny joins
Speaker 2: us this morning readjusting ever higher, ed with your beautiful CJ.
Speaker 2: Lawrence like charts, even with CJ. Lawrence Green in the banner,
Speaker 2: you do a log extrapolation of the s and P.
Speaker 3: Five hundred.
Speaker 2: Is that all this is we're climbing a wall of
Speaker 2: worry because no one else out there has a courage
Speaker 2: to simply extrapolate forward.
Speaker 3: Well, I think we definitely are climbing a wall of worry.
Speaker 1: And that's the best kind of bullmarket you can have.
Speaker 1: You don't want everybody being belief. You want people to
Speaker 1: to have concerns. I don't want people to to worry
Speaker 1: on a personal level, but on a professional level. When
Speaker 1: I see a lot of bearishness from a contrarian perspective,
Speaker 1: it usually works.
Speaker 4: Uh.
Speaker 1: I've made some of my best calls on market bottoms,
Speaker 1: uh when my gut was hurting and everybody was was
Speaker 1: in a panic mode. So we're not in panic mode
Speaker 1: right now. But on the other hand, there are a
Speaker 1: lot of people worrying about what's going on in the
Speaker 1: Middle East, and I'm not saying that's not worrisome, but
Speaker 1: it's it's certainly adding to the concerns. They're worrying about
Speaker 1: the bond market, they're they're they're worrying about a k
Speaker 1: economy that the consumers not going to continue to spend,
Speaker 1: and they're working worrying about too much capital spending. So
Speaker 1: there's a lot of worries up there out there. But meanwhile,
Speaker 1: it's really pretty simple or the market is also getting
Speaker 1: kind of rushed up. It's been a rocket ship because
Speaker 1: of earnings.
Speaker 4: And what we're starting to see once again that you know,
Speaker 4: as a pillar of this market. I guess last year
Speaker 4: was you know, kind of a narrower breath in this marketplace.
Speaker 4: Is the big tech stocks once again leading this market
Speaker 4: on good earnings. Certainly, are you concerned about that, I guess,
Speaker 4: narrowing breath in the market.
Speaker 1: Yeah, Well, again, I think people are always looking for
Speaker 1: something to worry about with regards to the market, and
Speaker 1: the breath issue is back. But however, once again I
Speaker 1: would point out that the earning story is fantastic for
Speaker 1: the S and P five hundred earnings breadth is actually improving.
Speaker 1: And not only that, but we've got the small cap
Speaker 1: and MidCap earnings which had been kind of in a
Speaker 1: coma since twenty twenty two. For the past six months
Speaker 1: or so, they're starting to really perk up, and expectations
Speaker 1: are already showing a record high earnings outlook for this
Speaker 1: mid caps.
Speaker 4: So I mean again, I guess towards the end of
Speaker 4: last year, we did have kind of a rotation out
Speaker 4: of some of those big cap growth names into some
Speaker 4: more Is there any legs left in that kind of trade,
Speaker 4: maybe a small MidCap as you suggested, maybe some other
Speaker 4: sectors here.
Speaker 1: Well, I think that other sectors will participate in this
Speaker 1: latest rally in this bull market. I think we're saying,
Speaker 1: you know, one of the problems is the Magnificent seven
Speaker 1: are are contributing to that. So consumer discretionary has been
Speaker 1: boosted recently by improvement in Amazon, and communications services have
Speaker 1: done well because Google and Meta dominate that space. But financials,
Speaker 1: I think as still have prospects of doing better. You
Speaker 1: know that there are signs that private credit situs not
Speaker 1: get the worst, might actually be be getting better as
Speaker 1: the economy continues to chuck along.
Speaker 2: Ed your Denny with us, folks are going to can't
Speaker 2: say enough about his newsletter. It's wonderful daily brief, really
Speaker 2: one of the major subscriptions out there.
Speaker 3: Ed, I'm going to assume long ago and.
Speaker 2: Far away at Yale they didn't have econ five seventy
Speaker 2: four applied empirical methods. This is back, Ediardenny, Folks was
Speaker 2: back in a simpler time of macro micro our. Simon
Speaker 2: White this morning at off the London Desk has a
Speaker 2: spectacular walkthrough of derivative finance, looking at the Greek letters
Speaker 2: of gamma, dispersion and correlation, and it's worry, worry, worry, OMG,
Speaker 2: things are terrible. If we created a wall of worry
Speaker 2: with our mathiness in modern global Wall Street.
Speaker 1: Well, I don't think I'm a inventing a phrase here,
Speaker 1: but it's all Greek to me. I actually did an
Speaker 1: econometric dissertation for James Toubin, and I proved that his
Speaker 1: theory was right for corporations, and so he loved it
Speaker 1: and I got through, I got my PhD and moved on.
Speaker 3: But yeah, I think there's too much.
Speaker 1: I think a lot of economists start with theories, start
Speaker 1: with the models, and then look for the data to
Speaker 1: confirm it.
Speaker 3: I worked the other way around.
Speaker 1: You know Ben Bernanke and his memoir of being at
Speaker 1: the FED that when he joined the FED, he had
Speaker 1: to learn something that was rather new to him, and
Speaker 1: he called.
Speaker 3: The current analysis. And I kind of like that.
Speaker 1: In other words, he had to learn how the world
Speaker 1: really works, had to learn about markets and how markets
Speaker 1: interact with data, and data impacts the markets. And that's
Speaker 1: what I practice, I've been practicing on all along, is
Speaker 1: current analysis, and that's a reality based economics.
Speaker 2: Let me get the seconds. Got four more questions. The
Speaker 2: bottom line, ed, is we have physics envy. And it
Speaker 2: started with you know, Newtonian mechanics nineteenth century, and now
Speaker 2: we've got alpha, beta, gamma, epsilon, delta, the others. And
Speaker 2: I just, folks, I just think the difference, the distinction
Speaker 2: between a Yar Denny strategy and some of the quad
Speaker 2: strategy is the angst of the age worry, worry, OMG.
Speaker 3: Paul Gamma dispersion. We used to call it.
Speaker 1: We used to call it political economy, and then suddenly
Speaker 1: it became a social science. Uh, and it's not a science.
Speaker 1: It's uh, it's political economy. It it's too complicated to
Speaker 1: put in a formula.
Speaker 4: So ed, I mean on that front, there we've got
Speaker 4: the market's got a lot of cross winds as it
Speaker 4: released to geopolitics, whether it be tariffs from earlier this
Speaker 4: year and last year, to the war in Iran. But
Speaker 4: boy that at least the stock market seems to look
Speaker 4: through all of that and focus on maybe just the earning,
Speaker 4: which are arguably the most fundamental.
Speaker 3: Yeah.
Speaker 1: I think what's going on in the stock market is
Speaker 1: everybody knows that based on history, that crises, a geopolitical
Speaker 1: crises in the past, have turned out to be buying opportunities.
Speaker 1: So when we get a geopolitical crisis, we get kind
Speaker 1: of scared for a couple of weeks, maybe four weeks,
Speaker 1: as we did in March, and then everybody remembers that
Speaker 1: that's actually a buying opportunity. And that's exactly what happened
Speaker 1: on March thirty first, is suddenly investors said, well, you know,
Speaker 1: if the president's going to be looking for an exit
Speaker 1: ramp and we're going to have a cease fire, then
Speaker 1: we can buy stocks today at a lower price with
Speaker 1: record high earnings ED.
Speaker 3: Thank you so much. How's your beast doing.
Speaker 2: I don't see your dog in the background there in
Speaker 2: your couch dog
Speaker 1: Okayans As Max is walking about, he's walking, probably reading
Speaker 1: the Wall Street Journal or peing on it one of
Speaker 1: the Ardn't you think you so much?