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Speaker 2: podcast here. A lot happening on economic calend, A lot
Speaker 2: happening on the Central Bank calendar this week. All us
Speaker 2: are gonna be on the Fed there. We're gonna hear
Speaker 2: from fitchairman j Pal on Wednesday. We'll send Michael McKee
Speaker 2: down there on the accella train and we'll send he'll
Speaker 2: have all the re reporting for us on Wednesday. Let's
Speaker 2: check out with Lori Calvasen ahead of US Equity Strategy
Speaker 2: RBC Capital Markets, Lourie, Is it all about the FED?
Speaker 3: Here?
Speaker 2: I mean, do it earnings matter? Are we just kind
Speaker 2: of waiting on the FED to see if it's two cuts,
Speaker 2: three cuts? Maybe a hike in there somewhere? I don't know,
Speaker 2: how are you guys approaching the kind of the overview
Speaker 2: of this market.
Speaker 4: It's a great question, and thanks as always for having me,
Speaker 4: by the way, But you know, I joke that as
Speaker 4: an equity strategist, we've all sort of had to become
Speaker 4: rape strategists these last few years. And thankfully I get
Speaker 4: along with my rate struggles very well. He does a
Speaker 4: great job. But look, I do think that to some extent,
Speaker 4: I wouldn't say maybe all about the FED, but I
Speaker 4: would say maybe mostly about the FED. So maybe, you know,
Speaker 4: like eighty ninety percent or so. And you know, I
Speaker 4: would say in my conversations the last few weeks at least,
Speaker 4: I feel like we've got a lot of the angst
Speaker 4: out of the way. So it's been the economy is hot,
Speaker 4: How can the Fed possibly cut Oh my gosh, there
Speaker 4: aren't going to be any March cuts, And we've been
Speaker 4: kind of pushing back saying, well, we never thought they
Speaker 4: were going to be March cuts to begin with. We've
Speaker 4: always been looking at June. Our guys have dialed down
Speaker 4: their expectations for cuts in the back half of the years,
Speaker 4: so we have you know, pivoted a little bit, but
Speaker 4: probably not as much as other folks. I would say.
Speaker 4: You know, we're watching as always the commentary this week
Speaker 4: as an equity person, I care what Powell says on inflation,
Speaker 4: the labor market, and kind of the overall characterization of
Speaker 4: the economy. But you know, it always does kind of
Speaker 4: come down to the dots. So we'll see what happens.
Speaker 5: So how are you recommending people play this? Do you
Speaker 5: like large caps or small caps? Are you big on tech?
Speaker 5: Souring on tech a bit? Tell us a little bit
Speaker 5: about what your pick seling.
Speaker 4: Yes, so you know, we are kind of if we
Speaker 4: don't make a ton of sector changes all that frequently.
Speaker 4: Our last batch was back in January. That is very
Speaker 4: characteristic of us to kind of move slowly and not
Speaker 4: that often on the sector views. But we did downgrade tech,
Speaker 4: and part of what we thought was just that tech
Speaker 4: if you looked at the medians doock valuation six months,
Speaker 4: you know, kind of middle of twenty twenty three, still
Speaker 4: looked pretty reasonably valued. And by the time we got
Speaker 4: to the beginning of twenty twenty four, your medium tech
Speaker 4: stock was pretty darn expensive. So it wasn't just you know,
Speaker 4: sort of the big megacap growth names that we had
Speaker 4: sticker shock on valuation for. We've also thought, you know
Speaker 4: that frankly, we were never sort of headed toward an
Speaker 4: eminent recession the way a lot of folks were. So
Speaker 4: we've been in the rotation camp, and we said at
Speaker 4: the beginning of this year it's probably going to take
Speaker 4: a while for the rotation to happen. The thing that
Speaker 4: really needed to happen was that economic expectations needed to
Speaker 4: get reinvigorated. That's the why of this whole you know,
Speaker 4: Fed kerfuffle right now, right if the FED holds off
Speaker 4: on cutting or minimizes the cuts, it's because the economy
Speaker 4: is great. It's kind of twisted a lot of people's
Speaker 4: heads into a pretzel. But we've really been trying to
Speaker 4: position our sector views for that move kind of into
Speaker 4: cyclicality down the road.
Speaker 2: Haylor, I know, is a head of strategy. A big
Speaker 2: part of your role is to travel really around the
Speaker 2: world and meeting with RBC's big institutional investor clients. As
Speaker 2: you've been doing that this year, what's the settim been
Speaker 2: out there and how has a change?
Speaker 4: Maybe it's a great question. You know, our sentiment indicators
Speaker 4: tell you there's a lot of froth out there. Specifically,
Speaker 4: if you look at CFTC where we've been around, you know,
Speaker 4: early twenty twenty pre COVID highs, early twenty eighteen highs.
Speaker 4: I would say things don't quite feel that frothy in
Speaker 4: the conversations. They feel more like the AAII indicator, which
Speaker 4: is about one standard deviation about the long term average,
Speaker 4: so that's at a problem point, but not at two
Speaker 4: standard deviations, which is when things have typically felt very
Speaker 4: you know, kind of silly over the course of time.
Speaker 4: So things don't feel silly. It feels like a begrudging bullishness,
Speaker 4: like like people have sort of been pulled into this
Speaker 4: fighting tooth and nail and they've sort of accepted, you know,
Speaker 4: that the economy is on a decent track, but they're
Speaker 4: not all that happy about it, and they're frustrated by
Speaker 4: the dominance of the big names, but they're you know,
Speaker 4: sort of confused about when that leadership is actually going
Speaker 4: to shift. So I would say it's kind of frustrated
Speaker 4: bulls out there would be my characterization.
Speaker 5: Frustrated bulls. Another question of what you're getting asked is
Speaker 5: is anyone's starting to ask you questions about how to
Speaker 5: position for the US selection?
Speaker 4: Good, Yeah, it's a great question. It depends on where
Speaker 4: they live, is the honest answer. So European investors, Canadian investors. Obviously,
Speaker 4: I work at a Canadian bank, so I spend a
Speaker 4: lot of time with the Canadian investors. We have a
Speaker 4: franchise down in Australia as well, so I spent a
Speaker 4: decent amount of time talking to those folks. That has been,
Speaker 4: you know, kind of one of the top questions in
Speaker 4: my meetings since last summer, and really heated up in
Speaker 4: the fall, in December and January as well. In the US.
Speaker 4: It's really the interest has been sparked by the primaries
Speaker 4: and caucuses and it's you know, we've used this phrase
Speaker 4: in the past, staring at the sun, you know, ended
Speaker 4: up last year, people are like, I'll look, but let's
Speaker 4: talk about it really quick, and then let's look away.
Speaker 4: It's too painful. There's nothing to do.
Speaker 6: Yet.
Speaker 4: Now they're opening their eyes, letting their gaze, you know,
Speaker 4: sort of stay there a little bit longer. It's still
Speaker 4: pretty painful though, so people are happy to get out
Speaker 4: of the conversation. I don't think people are doing a
Speaker 4: lot yet, but they're dusting off the historical playbook. You know,
Speaker 4: one stat we have we liked the financial sector, and
Speaker 4: everyone likes the stat that seven of the last eight
Speaker 4: presidential election years you've seen the financial sector outperform the.
Speaker 3: S and P.
Speaker 4: The only time it didn't in the GFC. So that's
Speaker 4: sort of a good, you know, data point for people.
Speaker 4: I joke and say, there's safety in numbers. Right, It's
Speaker 4: such a difficult topic to talk about if you live
Speaker 4: in the US, but I say, you know, professionally, there's
Speaker 4: safety in numbers. So let's just talk about the numbers
Speaker 4: and what those represent.
Speaker 2: All right? How about that you just mentioned the financials there?
Speaker 2: Why do you guys like the financials here? Given we
Speaker 2: may see the FED start to cut rates this year,
Speaker 2: So look.
Speaker 4: I think if the fed cuts a little bit. The
Speaker 4: economic you know, the economic backdrop stays you know, decently strong,
Speaker 4: and you know, inflation is somewhat contained. You know, it's
Speaker 4: still heading in the right direction. That feels kind of
Speaker 4: like the sweet spot for the banks to me, you know,
Speaker 4: I think if we you know, and we really did
Speaker 4: do the financials as the plumbing of the economy, it's
Speaker 4: kind of become a boring sector. That wasn't you know,
Speaker 4: the case back in the you know, kind of two thousands,
Speaker 4: pre twenty ten, you know, back in you know, life cycles.
Speaker 4: But it is kind of a boring sector at this
Speaker 4: point in time. And if you think the economy is
Speaker 4: on the mend, it tends to do very well when
Speaker 4: consumer confidence is recovering, and that does seem to be
Speaker 4: the case since twenty twenty two. We're in this slow,
Speaker 4: kind of staggered halting up trends. But also it's just cheap,
Speaker 4: I will tell you. Gerard Cassidy and our bank's team,
Speaker 4: John Arshrom covers the regional banks. They have generally been
Speaker 4: more constructive than our analysts and other sectors, and Gerard
Speaker 4: in particular has really kept a cool head through a
Speaker 4: lot of the episodes that have happened over the last
Speaker 4: year and a half. And then frankly, you know, if
Speaker 4: you look at banks earnings revisions, they're midway through and
Speaker 4: earning's revision recovery. So we like that component. And then
Speaker 4: if you just go back to the rotation trade, you
Speaker 4: have to think about it in market cap terms. If
Speaker 4: we take a lot of the money out of big tech,
Speaker 4: or even a decent amount and roll it into other
Speaker 4: parts of the market, I really think that the financials
Speaker 4: ultimately have to participate. If value outperforms, financials tend to
Speaker 4: as well, and that's really just a function of their
Speaker 4: big market cap in that part of the market.
Speaker 5: Can you shift gears a little bit and talk to
Speaker 5: us about what your views are on energy? Doing enormously
Speaker 5: well so far this year, but we've got a potential
Speaker 5: for a slowing economy, potential for lower rates. What's the
Speaker 5: best way to think about energy going forward?
Speaker 4: So I would say on the economy, if you look
Speaker 4: at the data and we pull this off Bloomberg, just
Speaker 4: on the ECFC function. So I'll give you guys a
Speaker 4: little bit of a plug. But if you monitor how
Speaker 4: GDP forecasts are moving back last summer twenty twenty four
Speaker 4: real GDP on the year was expected to be point
Speaker 4: six percent, so just barely in positive territory the beginning
Speaker 4: of this year and it moved to above one. I
Speaker 4: forget exactly where it was as recently as mid February.
Speaker 4: It was one six and at the end of February
Speaker 4: it hit two point one percent, and that's still where
Speaker 4: I believe it is today. And so we've really been
Speaker 4: seeing the economic story improve. Multiple quarters for twenty twenty
Speaker 4: four are now seeing improvement. So I don't buy the
Speaker 4: idea that we're heading into a stagnant, you know, economic backdrop.
Speaker 4: I think that we're breaking out of the malaise that's
Speaker 4: characterized the last few years where people have said it's
Speaker 4: going to be sluggish forever. It's like, oh no, no, no.
Speaker 4: So that benefits energy, but frankly, you know, it's also
Speaker 4: an inflation hedge and it's cheap, and then you've got
Speaker 4: you at political risks, so we like a lot about
Speaker 4: it right now.
Speaker 2: All right, Lurie, thank you so much as always for
Speaker 2: joining us. Lori cavacin ahead of US equity strategy at
Speaker 2: RBC Capital Markets. Let's check in with David Katz, President
Speaker 2: and chief investment officer Matrix Asset Advisors. Hey, David, thanks
Speaker 2: so much for joining us here. I mean, we got
Speaker 2: a busy week here, a lot of central banks reporting,
Speaker 2: you know, with some of their comments and statements, and
Speaker 2: we're going to get some views from a lot of
Speaker 2: central banks here. When you step back and you think
Speaker 2: about our central Bank, our Federal Reserve, what do you
Speaker 2: think we're going to see? And you think the markets
Speaker 2: are accurately discounting what we might see.
Speaker 7: You think the markets are coming to terms that the
Speaker 7: Fed is going to be less aggressive in lower and
Speaker 7: rates this year and probably starts a little bit later.
Speaker 7: We're not expecting any great news out of the Fed
Speaker 7: this week or any incrementally new news. We think they're
Speaker 7: going to talk about wanting to see better inflation numbers,
Speaker 7: but the idea that they will be lowering rates will happen.
Speaker 7: They're just not going to give a timeframe. So we
Speaker 7: don't think anything news is going to come out of
Speaker 7: the Fed. We think, of anything, it creates a little
Speaker 7: bit of a headwind for the market this week, but
Speaker 7: today the market seems to be ignoring that.
Speaker 5: But looking further ahead, I mean, we've got a whole
Speaker 5: bunch of other central bank decisions coming up this week.
Speaker 5: Do you feel like the vibe is going to be
Speaker 5: overall more hawkish than people are expecting or is it
Speaker 5: going to be like some signs of dubbishness coming through.
Speaker 7: We think there is going to be a balance of
Speaker 7: both of those. We think the critical thing for investors
Speaker 7: is not to get obsessed with the exceptionally near term.
Speaker 7: Understand that the FED and the other central banks are
Speaker 7: likely going to be more dubvish as the year progresses,
Speaker 7: and if you're investing today, the markets are going to
Speaker 7: discount that sooner rather than later. So we'd be looking
Speaker 7: to put your portfolio to work with the idea that
Speaker 7: the FED is going to be lowering the rates. We're
Speaker 7: generally optimistic about stocks this year. We do expect a
Speaker 7: lot more volatility than we've seen. You had a great
Speaker 7: fourth quarter and a very good first quarter, so there's
Speaker 7: going to be some volatility. There's going to be some pullbacks,
Speaker 7: but we think ultimately stocks end the year higher than
Speaker 7: they are now, probably in the low double digits.
Speaker 2: All right, David, giving that background, what are some of
Speaker 2: the sectors you like here? Assuming you know I haven't
Speaker 2: been long the Magnificent seven, like Tom Keene has, what
Speaker 2: do you like sector wise?
Speaker 7: So basically, we think there's going to be a rotation
Speaker 7: this year with some of the things that did not
Speaker 7: do as well last year starting to do better. We
Speaker 7: think that the things that did great last year are
Speaker 7: going to slow down. You're already starting to see technology
Speaker 7: slow down some. We think that's going to continue, so
Speaker 7: we wouldn't chase last year's winners. Healthcare and financials started
Speaker 7: this year off very good after a very poor.
Speaker 3: Twenty twenty three.
Speaker 7: We think that's going to continue, so we think there
Speaker 7: are lots of opportunities in that area to make money.
Speaker 3: On a go forward basis.
Speaker 7: Utilities had a very poor twenty twenty three and even
Speaker 7: a worse start to twenty twenty four, so we think
Speaker 7: if you have a six to twelve month time horizon,
Speaker 7: there are lots of it stocks in the utility sector,
Speaker 7: then we think are going to be good investments, especially
Speaker 7: if the economy slows down a little bit later in
Speaker 7: the year and the Fed starts the lower rates, We
Speaker 7: think utility is going to be a very good place
Speaker 7: to be, so nice place to make money with much
Speaker 7: lower risks.
Speaker 5: Looking at the return so far. You're to date in
Speaker 5: different sectors of the SP five hundred. The one at
Speaker 5: the very bottom is real estate. What's your view there?
Speaker 3: So we don't have a great conviction on real estate.
Speaker 7: We think that if rates start to go lower, as
Speaker 7: we expect, it probably gives.
Speaker 3: Them a little bit of a tailwind.
Speaker 7: But there's so many moving parts right now with real estate,
Speaker 7: we just think they're better places to make money. So
Speaker 7: that's a sector we don't have a great conviction on.
Speaker 7: We've been negative on it for the last eighteen months.
Speaker 7: I'd say we're probably neutral at this point, David.
Speaker 2: One of the names on your list that jumps out
Speaker 2: of me is one we all know. Cisco. CSCO is
Speaker 2: the ticker symbol there, two hundred billion dollar market cap,
Speaker 2: but the stocks just kind of flat here. You're to
Speaker 2: date flat over the ear twelve months. It is certainly
Speaker 2: not you know, received any AI pop. What's your call
Speaker 2: on Cisco?
Speaker 7: Well, we do think it is a second derivative AI
Speaker 7: play as work communications take place, as computers and PCs
Speaker 7: are using more mainframes in the cloud to do AI,
Speaker 7: we think Cisco's going to have to lay out more cables.
Speaker 7: You had a problem last year because there was a
Speaker 7: lot of overordering because people weren't able to get as
Speaker 7: much as they wanted. When Cisco is able to fulfill
Speaker 7: all of their orders, a lot of those orders got canceled,
Speaker 7: so that's made a two or three quarter slow down
Speaker 7: in their revenues. We think it's going to pick up
Speaker 7: this year. We think the worst is behind them. Box
Speaker 7: to twelve thirteen times earning and pays it like a
Speaker 7: three and a half percent yield, So we think for
Speaker 7: investors that have a twelve to eighteen month time horizon,
Speaker 7: they're going to start to catch up. We're not expecting
Speaker 7: anything spectacular, but we easily think the stockcast fifteen to
Speaker 7: twenty percent upside with very low risks.
Speaker 5: Another name on your list which intrigues me quite a lot. Starbucks.
Speaker 5: The stock's not been doing particularly well over the last
Speaker 5: twelve months, but what's the play there?
Speaker 7: So the great thing about Starbucks is they make an
Speaker 7: addictive product that generally is pretty safe for people and
Speaker 7: in fact, in some cases healthy for people. They've got
Speaker 7: a great footprint around the globe. The stock has done
Speaker 7: poorly in the last six months out of concerns that
Speaker 7: China is slowing down. China is slowing down, but China
Speaker 7: is going to start some stimulative packages in the next
Speaker 7: three to six months. And you're getting Starbucks at a
Speaker 7: great price that pays a good yield. We like the
Speaker 7: new CEO of the company. We think the company is
Speaker 7: very well positioned for the future. Gen Z likes their products.
Speaker 7: They like the ice and coffees, so we think that
Speaker 7: they are going to be a sports to be reckoned
Speaker 7: with for the long term, and you're getting it at
Speaker 7: a very good price.
Speaker 2: David, here's a name. Like. We had the regional banking
Speaker 2: crisis starting a little bit more than a year ago,
Speaker 2: and I've always said, boy, I'd love to have I'd
Speaker 2: love to be able to kind of go into my
Speaker 2: PMF I'm at a hedge fund and say, hey, give
Speaker 2: me another couple hundred million bucks. I'm going along regional banks.
Speaker 2: I think this is the bottom. I'm not sure we're
Speaker 2: there yet, but P and C Bank is on your list,
Speaker 2: and this is I'm not really a region, it's kind
Speaker 2: of like a super regional, I guess, but it's I
Speaker 2: think kind of grouped with some of those regional banks.
Speaker 2: Is it safe to go into some of these names.
Speaker 2: Do you think.
Speaker 7: It's safe to go into the best quality super regional?
Speaker 7: So the banking group has had a stealth rally since
Speaker 7: May of last year. They've done really well after the
Speaker 7: pain of last March April. But we really would want
Speaker 7: to focus on the best quality companies, best credit quality,
Speaker 7: good commercial real estate portfolios, and conservative financing. PNC meets
Speaker 7: that ticket US Bank or same thing Bank of New York.
Speaker 7: We would not delve into the lower quality companies just
Speaker 7: because we don't know the risk there, and you only
Speaker 7: find out the risk for the big problems after the fact.
Speaker 3: Some of the ones that I mentioned.
Speaker 7: Really good quality, very good valuations, very nice sealds. We
Speaker 7: think if the Fed starts lowering rates and we don't
Speaker 7: have a recession, which we're not forecasting, these companies should
Speaker 7: do quite well real quick.
Speaker 5: We don't have a lot of time left. Apple, We've
Speaker 5: been talking about it a lot this morning. What's your
Speaker 5: view there, especially with the news that about the potential
Speaker 5: tie up with Google.
Speaker 7: So we own Apple. We went into this year when
Speaker 7: it was the one ninety to one ninety five level
Speaker 7: a little bit less enthusiastic. At the one to seventy level.
Speaker 7: We think it's a very good re entry point for
Speaker 7: new moneies. We think today's announcement or speculation is a positive.
Speaker 7: Apple is going to have AI on their new phones.
Speaker 7: Whether it's you know, with with Google or with someone else,
Speaker 7: there will be a new product cycle. We think the
Speaker 7: market has gotten overly negative over the last few weeks,
Speaker 7: so it's a pretty good entry point. It's it's about
Speaker 7: fairly valued, but we think we'll go higher.
Speaker 2: All right, David, thanks so much for joining us again.
Speaker 2: David Cassie's a president and chief investment officer for Matrix
Speaker 2: Asset Advisors. Let's step back and take a big, big
Speaker 2: holistic look at these markets. So we can do that
Speaker 2: with our next guest, Dana Diyoria. She is co CIO
Speaker 2: of invest Net. Dana, thanks so much for joining us here.
Speaker 2: You know, I'd love to just start with asset allocation here.
Speaker 2: We kind of grew up with a sixty forty equity
Speaker 2: fixed income portfolio. Now a lot of folks are saying, hey,
Speaker 2: you need to have a meaningful presence in alternative investments,
Speaker 2: so let's step back in asset allocation. How do you
Speaker 2: guys think about it right here?
Speaker 6: Well, we definitely an investment you know, accommodate both right
Speaker 6: at a high level, I would say to balance, the
Speaker 6: sixty forty still dominates, you know, no surprise there, you know.
Speaker 6: And it's interesting because I'm sure you hear a lot
Speaker 6: of this, of course, because in the last few years
Speaker 6: we've just had, you know, several times where it just
Speaker 6: didn't seem like equities and fixed income we're hedging each other.
Speaker 6: I you know, the performance of fixed income, I think
Speaker 6: is the real issue that people are having and why
Speaker 6: you're hearing kind of more of a push for alternatives.
Speaker 6: You know, everybody expects equities to drop there. They're not
Speaker 6: as sanguine about seeing their fixed income losing, especially when
Speaker 6: it gets to double digits. But you know, so there's
Speaker 6: a I would say, a steady increase in interest and alternative.
Speaker 6: And I also think a lot of the big alternative
Speaker 6: players are looking to come down market to you know,
Speaker 6: sort of the retail advisory area where I fit. So
Speaker 6: I do expect, just because there's interest there as well,
Speaker 6: to see more of that.
Speaker 5: What do your clients say to you about equities, because
Speaker 5: you know, we're looking at the futures this morning. There's
Speaker 5: a lot of green at the start of a week
Speaker 5: where there's a very strong expectation that the FED could
Speaker 5: wind up being more hawkish than anything we would have
Speaker 5: expected at the start of the year.
Speaker 6: Yeah, I think it's just it's price and at this point,
Speaker 6: you know, I think we started the year with such
Speaker 6: a high expectation of great cuts and it really didn't
Speaker 6: make a lot of sense with where the data was. Right,
Speaker 6: the FED had bet at the end of last year
Speaker 6: higher for longer. Obviously, the Fed's mandate is inflation and employment,
Speaker 6: and both of those point very strongly at this point
Speaker 6: to not cutting. So I don't think anybody's expecting a
Speaker 6: rate cut this week, and I think that's been you know,
Speaker 6: kind of fully priced in. You know, the question, of course,
Speaker 6: is what is Power going to say. I would expect that,
Speaker 6: you know, he does come out trying to thread the needle.
Speaker 6: But the reality is that if we don't see some
Speaker 6: cracks and employment and we do see inflation remain sticky. Obviously,
Speaker 6: PPI court inflation as well have been stickier than what
Speaker 6: we've wanted, and you know, things like initial jobless claims.
Speaker 6: I mean, yes, the unemployment rate picked up a bit,
Speaker 6: but initial jobless claims really are remaining strong, I wouldn't,
Speaker 6: I think too is certainly on the table all ELSEQL today.
Speaker 2: All right, So given kind of that background, which you know,
Speaker 2: I guess from an industry perspective is kind of uncertain,
Speaker 2: where are you suggesting any equity markets and investors maybe
Speaker 2: put their focus these days?
Speaker 6: Well, we look at it, of course from a long
Speaker 6: haul perspective, right, I mean, when you're thinking about just
Speaker 6: people's mess eggs and retirement planning and everything, and kind
Speaker 6: of the point I try to make is that if
Speaker 6: you're if you're invested in the index, or you're invested
Speaker 6: even in a typical active strategy, that's not going to
Speaker 6: want to take massive tracking air. We've seen a lot
Speaker 6: of active managers, you know, kind of struggle right obviously
Speaker 6: with the with the cap weighted indexes being so heavily
Speaker 6: weighted in the Magnificent seven and they just you know,
Speaker 6: the blowout performance there. It's really hard from active management
Speaker 6: perspective to take too much tracking err And what that
Speaker 6: means is that most people have their portfolios invested pretty
Speaker 6: heavily there. So till to the extent that you can
Speaker 6: away from that, I still do think makes sense. And
Speaker 6: I think depending on what your time frame in is
Speaker 6: and how you're looking at it. You can go about
Speaker 6: that differently. I'm a proponent of small and small value
Speaker 6: in particular, and again you're not you're not putting the
Speaker 6: whole thing there, but but a tilt there. It does
Speaker 6: outpaced inflation over time. It has return better than the
Speaker 6: market over the long haul. But you know what else
Speaker 6: we're seeing as well as a quality till if you
Speaker 6: if you think we haven't you know, kind of on
Speaker 6: the other side of the spectrum, I'll say, right, if
Speaker 6: you think that we haven't gotten past recession concerns, you
Speaker 6: look at how quality is performing so far this year,
Speaker 6: and of course you've got Nvidia in there meta you know,
Speaker 6: in the standard index there, so of course you know
Speaker 6: that's that's performing very well. But you know, a defensive position,
Speaker 6: whether it's fundamental kind of defensive position or volatility based
Speaker 6: defensive position, I think can make sense if you're worried
Speaker 6: about you want to stay in equity markets, but you're
Speaker 6: kind of looking at how things are developing and concerned
Speaker 6: that maybe the soft landing is not a guarantee.
Speaker 5: Talk to me a little bit about what your expectations
Speaker 5: are for corporate earnings for the rest.
Speaker 2: Of the year.
Speaker 4: Yeah.
Speaker 6: I mean the question is I guess around, you know,
Speaker 6: have we again I'll use the word, have we become
Speaker 6: too sanguine about you know, the fact that corporate teams
Speaker 6: now are going to be rolling over debt in a
Speaker 6: higher for longer type of environment. It obviously the Magnificent seven.
Speaker 6: This is another place where they've really you know, shine
Speaker 6: because the expectation is very high. Already, the multiples there
Speaker 6: are very high. Uh, the earnings appear so far to
Speaker 6: support it, and then you kind of look at you know,
Speaker 6: so I segment it and say okay, and then I
Speaker 6: kind of look, you know, across the spectrum at smaller
Speaker 6: caps and and my you know, my aim there would
Speaker 6: be a longer haul kind of a investment because it
Speaker 6: is very possible that when you get to that side
Speaker 6: of things and you look at companies that can't necessarily
Speaker 6: self fund, they do have to go to capital markets,
Speaker 6: and they are facing interest rates that maybe aren't going
Speaker 6: to decrease as fast as they thought. You know, small
Speaker 6: taps tend to be more interest rate sensitive. So if
Speaker 6: you kind of split up, you know, with the corporate
Speaker 6: universe and large and or self funding I'll call it, right,
Speaker 6: which tends to be more large, not obviously entirely. And
Speaker 6: then you know, versus the part of the market that
Speaker 6: really does need to go to capital markets. I think
Speaker 6: that's going to have you know that that will play
Speaker 6: out differently. Now, of course, again, if you're in a
Speaker 6: standard index or if you're in an actively managed solution
Speaker 6: that you know has very not huge tracking error, you
Speaker 6: could probably live through, you know, whatever what comes out
Speaker 6: with corporate earnings, even if productivity uh doesn't necessarily kind
Speaker 6: of heal all wounds and you know, live through it,
Speaker 6: buy it, buy it. Maybe lower valuations for some of
Speaker 6: these companies that you know have to kind of get
Speaker 6: to the other side, and then when interest rates are decreasing,
Speaker 6: they do benefits.
Speaker 2: All right, Danny, thanks so much for joining us. Really
Speaker 2: appreciate getting your thoughts as always. Dana Dyoria, co cio
Speaker 2: of invest Net. All right, your daily look at the
Speaker 2: front pages around the world. All right, Lisa, lots of
Speaker 2: stuff we could go here with the newspapers. Where do
Speaker 2: you want to start?
Speaker 1: All right, We're starting with Bloomberg. Mark, I'm gonna have
Speaker 1: the great article out about Apple CarPlay. You know, where
Speaker 1: you can listen to the Bloomberg Business hapf Yes. So
Speaker 1: car Play was originally designed to fend off Android, right,
Speaker 1: so Bloomberger's reporting. Since Apple nicks those plans for its
Speaker 1: own car, the car Play is like a bigger thing
Speaker 1: right now. So this new concept for CarPlay, how is
Speaker 1: it different? It's going to be fully integrated into the vehicles,
Speaker 1: so it would take over more screens as well as
Speaker 1: more features like the radio and air conditioning. Now, Paul,
Speaker 1: you have the car Play. So if the current one
Speaker 1: interface they say it's more focused on Apple services, doesn't
Speaker 1: handle most of the cars control. So that's why this
Speaker 1: one's going to be a little bit different. Okay, so
Speaker 1: it's supposed to be better this way response to Google's
Speaker 1: Android Automotive where the competition is because that one is
Speaker 1: installed to the car itself.
Speaker 2: So you see what I find it. I just got
Speaker 2: jennifer new car, so it comes with the big screen,
Speaker 2: which is all new for me because my car before
Speaker 2: it was ten years old, didn't have any of that
Speaker 2: kind of stuff here. So what I found is it's
Speaker 2: this screen is actually kind of your iPhone up on
Speaker 2: the screen, so it's got everything you use on your phone,
Speaker 2: like the Bloomberg Business app or like Google Maps for example,
Speaker 2: and boom it's just kind of up there. It's all integrated,
Speaker 2: and I think that's so for better or worse, Apple's
Speaker 2: more integrated into your driving experience.
Speaker 1: So that's what they want to target. I know that's
Speaker 1: what they want to do because guess before you couldn't
Speaker 1: do some of the car controls with it. So now
Speaker 1: that they want to change that more competitive viata.
Speaker 2: It's a competitive market. Why kind of say that? You know,
Speaker 2: the Consumer Electronics show out in Vegas and January. Every
Speaker 2: area is basically now just an auto show with some
Speaker 2: you know, toys around it. So see what it's going. Yeah,
Speaker 2: fully integraate what else?
Speaker 6: Scott?
Speaker 1: All right, this is the Wall Street Journal. The hot
Speaker 1: the hottest ticket in American dining, they say, is Applebee's
Speaker 1: Weekly Pass. People went crazy for this. You paid two
Speaker 1: hundred dollars. Basically it's a date night pass. It's a subscription,
Speaker 1: and it's sold out in less than a minute. Here's why,
Speaker 1: because people are trying to save money, right, So with
Speaker 1: this pass you get thirty dollars off of each bill
Speaker 1: once a week for a year. So people only paid
Speaker 1: two hundred dollars for this. It sold out quickly. I
Speaker 1: mean prices to eat. You know, you've been out to eat, right,
Speaker 1: It's it's crazy.
Speaker 2: In the city.
Speaker 5: It's we don't eat out anymore, right, which is like
Speaker 5: why are we living here? Yeah, but that is this
Speaker 5: gonna be a good thing for Applebee's because I feel
Speaker 5: like there's a lot of people who are saving a
Speaker 5: lot of thirty dollars here and yeah, it's gonna add up.
Speaker 2: They did.
Speaker 1: They sold like a limited number.
Speaker 2: Okay, okay.
Speaker 1: But the thing is is like they talked to one
Speaker 1: couple on it, which was interesting because they won it.
Speaker 1: They say, it's like winning the apple Bee's you know, lottery,
Speaker 1: And they went out and when they travel they go
Speaker 1: to Applebee's now, so they save on their vacations wherever
Speaker 1: they go, they kind of do.
Speaker 2: The apple Bee's is in where Times Square. Oh okay,
Speaker 2: that's fun story. So I saw that. Yeah, there you go.
Speaker 2: I mean that's like the biggest Yeah. I think food
Speaker 2: inflation at least for me at the supermarket and then
Speaker 2: we go out a lot because we're empty nesters. It's man,
Speaker 2: is it real? I mean, and you can just see it.
Speaker 2: So I think a lot of consumers. Like what we've
Speaker 2: done is traded from name brands in the store to
Speaker 2: the store brand. Yes, you know, for a lot of things.
Speaker 5: Yeah, but we have a friend visiting in town from
Speaker 5: London now and his eyes are popping out of his
Speaker 5: head at the prices. And that's the guy coming from London.
Speaker 1: You know, it's bad that it happens, and you under
Speaker 1: eighty nine dollars.
Speaker 2: Steak I heard, and yeah, and he saw that it
Speaker 2: was a great steak and it was at nine thousand
Speaker 2: feet so it took a while to get that cow
Speaker 2: up there. But I guess that's worth the eighty nine.
Speaker 2: But but man, that was ridiculous.
Speaker 1: Oh what's also ridiculous our home prices, because that is
Speaker 1: a link to our next story. Business Insider has this.
Speaker 1: It's a community of tiny home villages and they're selling
Speaker 1: out fast. It's South Park Cottages, just outside of Atlanta.
Speaker 1: So the whole thought behind it was to create this
Speaker 1: community where everybody could afford a home, right because they
Speaker 1: started one hundred and ninety thousand dollars. They're small, you know,
Speaker 1: the one and two bedroom units, raising him from like
Speaker 1: four hundred to six hundred fifty square feet. But the
Speaker 1: mortgage payment around fifteen hundred dollars, so it's equal to
Speaker 1: what they were paying in rent, but they get to
Speaker 1: own something, so that's a difference.
Speaker 2: And it worked.
Speaker 1: All twenty nine units sold out in less than two months.
Speaker 1: They haven't even over a year before they were even
Speaker 1: started building it. So that developer now going to build
Speaker 1: another community in Georgia kind of with the same concept behind.
Speaker 2: You should bring that to New York.
Speaker 5: Yeah, yeah, yeah, I'm leaving for an apartment right now, Like,
Speaker 5: can we please bring some of.
Speaker 2: The historia exactly?
Speaker 1: But it's crazy.
Speaker 2: I mean, I think in the city, I mean, the
Speaker 2: panacea would be here in New York, and I guess
Speaker 2: a lot of other big cities is take these vacant
Speaker 2: office buildings, convert them into residential sounds easy, but what
Speaker 2: I've been told by the real estate pros is it's
Speaker 2: a lot harder than that. And in some cases it
Speaker 2: is impossible structurally wise and so on and so forth,
Speaker 2: and other cases is just prohibitively expensive to make the
Speaker 2: changes that would be needed.
Speaker 5: But yeah, Blueberg has actually done some incredible stories on this,
Speaker 5: and like one of the things that you don't think
Speaker 5: of is, for example, all the windows are at the edge.
Speaker 5: So if you've got a place in the middle, you've
Speaker 5: gotten no drum lights.
Speaker 2: Yeah, yes, so I don't know what's going to happen there,
Speaker 2: but all right, maybe well just buy these little microplaces,
Speaker 2: all right. And this next one I'm not sure I
Speaker 2: want to go to.
Speaker 1: But yeah, letter it's about your toes, and your feet
Speaker 1: need health. Forget the six pack ads. You need well
Speaker 1: spaced toes. This is the latest new fitness trend. Apparently
Speaker 1: healthy feet. They help with balance stability, right, they help
Speaker 1: build foot strength. So that's where this comes. Better spread,
Speaker 1: better balance, you get it. Okay, So toe spreaders, they
Speaker 1: are becoming popular. You've got them when you get a pedicure,
Speaker 1: you know, they put the little toe spreaders in your feet.
Speaker 1: Now it's a must have training tool. So people are
Speaker 1: buying these. You have models showing them off, you have
Speaker 1: these elite athletes showing them off. They cost about you know,
Speaker 1: ten bucks. You can pay for one, or you can
Speaker 1: go as high as like sixty five dollars.
Speaker 5: And this is kind of like the Kim Kardashian brands skims.
Speaker 5: They've got the waist trainer. Oh oh, this is the
Speaker 5: toe trainer.
Speaker 1: The toe trainer. Yeah, but it's like the hot new
Speaker 1: thing they're made from, like fel foam, silicone gel, you
Speaker 1: name it. But it's about your foothealth. So you got
Speaker 1: to watch your feet, Paul, make sure they're spread nicely.
Speaker 2: Okay, you toes, well, I'm about the ones squeezing my
Speaker 2: foot into these crazy high hills that you guys are so,
Speaker 2: I mean, you don't look over.
Speaker 1: The issue is a woman who has these tiny little
Speaker 1: shoes and you're walking around everywhere and your toes get
Speaker 1: all cramped up.
Speaker 2: All right, Lisa. That was the newspaper segment with Lis Miteo.
Speaker 2: Thank you so much, LUSA. We appreciate that. This is
Speaker 2: the Bloomberg Surveillance Podcast, bringing you the best in economics, geopolitics, finance,
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