WEBVTT - Neuberger Berman Group Managing Director Steve Eisman Talks the Fed Decision & Market Outlook

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<v Speaker 1>The first print here off Lisa's great data check is

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<v Speaker 1>up five ninety five on the dough. What a perfect

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<v Speaker 1>moment to speak to mister Eisman with the newbury. Berman claimed

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<v Speaker 1>in a movie of a few years ago, look for

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<v Speaker 1>the new Heisman Hollywood property. I think it's a Memorial Day, Paul.

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<v Speaker 1>Memorial Day's a good.

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<v Speaker 2>Opening, sure, you know, I guess it's very good. Look

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<v Speaker 2>for Bear Squeeze.

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<v Speaker 1>You're going to see that Memorial Day twenty twenty five, Steve,

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<v Speaker 1>is this just one big short cover? We got the

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<v Speaker 1>wall of money out there? Lawrence McDonald, who has been

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<v Speaker 1>brilliant on this with the action yesterday, is it an

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<v Speaker 1>indirect short cover going on?

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<v Speaker 2>That's too sophisticated for me. I mean, I find the

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<v Speaker 2>whole incredible amount of energy that people spend on the

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<v Speaker 2>Fed day more amusing than informative. You know, think about

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<v Speaker 2>it for a second, and how much ink was spilt

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<v Speaker 2>about whether the Fed with lower twenty five or fifty.

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<v Speaker 2>All right, so they lowered fifty, and then what happened?

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<v Speaker 2>The market had no reaction, just went up and down.

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<v Speaker 2>Nobody knew what to do. And today the market's up huge,

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<v Speaker 2>but rates are higher. So you know you put it

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<v Speaker 2>all together. I tried not to spend too much time

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<v Speaker 2>trying to figure it out. All I care about is

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<v Speaker 2>the general direction of the FED is lower. How much lower?

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<v Speaker 2>I don't particularly care. I don't think that's particularly important.

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<v Speaker 2>The more important question is how's the economy. Economy is slowed,

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<v Speaker 2>but the data seems to indicate that the economy is fine,

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<v Speaker 2>and that's all that really matters.

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<v Speaker 3>So what other than you, I guess, in the context

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<v Speaker 3>of the economy, what are the drivers for kind of

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<v Speaker 3>whether you're bullish or bearish. What's some of the big

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<v Speaker 3>variables that you've find.

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<v Speaker 2>I've gotten thematic more thematic in the last bunch of years,

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<v Speaker 2>and I think that there are two great equity themes

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<v Speaker 2>of our time, and we try and focus our portfolios

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<v Speaker 2>as much as reasonable on those themes are AI slash

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<v Speaker 2>tech and infrastructure. And I think those themes will last

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<v Speaker 2>for years. They'll be variations, you know, on the infrastructure

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<v Speaker 2>side there you know, politics do matter, but the overall

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<v Speaker 2>theme will continue. Paul, let me.

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<v Speaker 1>Interrupt with the data check here as a market surge,

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<v Speaker 1>Dow up five hundred and sixty six points on a

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<v Speaker 1>percentage basis, The market lifts here at nine thirty three,

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<v Speaker 1>greater than the futures nastacup two point three percent. As

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<v Speaker 1>Paul predicted, the vis comes in sixteen point four zero on.

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<v Speaker 3>The AI trade, Steve, how do you suggest people play it?

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<v Speaker 3>I think the first name people kind of jumped on

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<v Speaker 3>was in Nvidia for good reason, because they put up

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<v Speaker 3>that big revenue prints a couple.

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<v Speaker 2>Of years ago.

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<v Speaker 3>How else are you trying to play this?

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<v Speaker 2>So, I mean the way we play it is where

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<v Speaker 2>most people are playing it, in Vidia, some other chip companies,

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<v Speaker 2>the very large companies with massive databases. You know, then

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<v Speaker 2>the question becomes, you know what apps and who's going

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<v Speaker 2>to create them are going to work? And I think

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<v Speaker 2>that is so early right now that it's really not

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<v Speaker 2>worth talking about. You know, just as an example, the

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<v Speaker 2>part of the business of accenture that is doing extremely

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<v Speaker 2>well is not the consulting side, which would do when

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<v Speaker 2>companies are spending a lot of money on AI. It's

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<v Speaker 2>the outsourcing side. And the reason why the outsourcing side

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<v Speaker 2>is doing well is that most S and P companies

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<v Speaker 2>do not have their data sufficiently in one place, structured

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<v Speaker 2>appropriately to even do anything with respect to AI. So

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<v Speaker 2>it's very very early in the AI story. The one

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<v Speaker 2>longer term theme that we've been thinking about, although it's

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<v Speaker 2>so long time I don't know quite what to do

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<v Speaker 2>with it yet, is I think there's a good argument

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<v Speaker 2>to be made that we have seen hardware rerate up

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<v Speaker 2>and software somewhat de rate, and I think it's possible

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<v Speaker 2>that AI could cause that to continue, because it's possible

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<v Speaker 2>that the cost of creating software because of AI is

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<v Speaker 2>going to plummet. And if that's the case, some of

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<v Speaker 2>the iconic software companies out there may not have motes

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<v Speaker 2>around their businesses that are quite as.

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<v Speaker 1>High as they used to be, within the skill set

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<v Speaker 1>that you've earned. And at Newburg or Berman, do you

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<v Speaker 1>people believe the capex expenditure of technology is being done

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<v Speaker 1>intelligently and efficiently or is there wasted money being squandered

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<v Speaker 1>away on AI?

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<v Speaker 2>I mean, I'm sure both. It's you know, we won't know.

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<v Speaker 2>We won't know the answer to that question for years,

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<v Speaker 2>so I don't think it's worth trying to figure that

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<v Speaker 2>out at this point.

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<v Speaker 3>So how else do you think?

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<v Speaker 2>I mean, it's.

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<v Speaker 3>Are you A lot of folks are concerned about this.

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<v Speaker 3>Mag seven is concentration risk, just as a market concern.

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<v Speaker 3>Do you have this market structure concern that so much

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<v Speaker 3>of this market is weighted towards these MAG seven ors

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<v Speaker 3>that beyond kind.

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<v Speaker 2>Of Hey, well, I think one interesting aspect of that,

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<v Speaker 2>and I'll come to that is that many active managers,

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<v Speaker 2>probably more on the institutional side, underperform because their risk

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<v Speaker 2>parameters don't allow them to overweight the MAG seven because

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<v Speaker 2>the MEGS is so big and it's probably going to continue.

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<v Speaker 2>I don't think we will really see a broadening out

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<v Speaker 2>until we see apps come out so that some of

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<v Speaker 2>the middle more middle companies can do that. But that's

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<v Speaker 2>we're ways away from that.

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<v Speaker 1>Do you have a favorite MAG seven? Is there one

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<v Speaker 1>where you.

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<v Speaker 2>I don't want to talk about individual stocks. I'm just

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<v Speaker 2>not going to do that, all right. I get into

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<v Speaker 2>my firm gets me into trouble.

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<v Speaker 3>The firm gets you into trouble. You don't get yourself

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<v Speaker 3>into trouble. Okay, I got it on there. Just on

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<v Speaker 3>the infrastructure theme, yes, do I go out there and

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<v Speaker 3>just buy like Cummings and Engines and well.

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<v Speaker 2>Let let me talk about that because politics are important, Okay.

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<v Speaker 2>So I think that there are four mega infrastructure themes

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<v Speaker 2>and then there's a fifth. The four are on shoring.

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<v Speaker 2>The second is you know, improvement of the grid yep.

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<v Speaker 2>The third is everything having to do with actually building

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<v Speaker 2>the data centers and that there is overlap there with

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<v Speaker 2>the grid. And then there's then there's gratification, and then

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<v Speaker 2>there's all the bills that guid in pass to shove

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<v Speaker 2>money into all four boxes. You know where the politics

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<v Speaker 2>can become important is you know, I'll do to extreme cases.

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<v Speaker 2>If Trump sweeps, gratifications are going to get de emphasized,

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<v Speaker 2>and if Harris sweeps, you know, gratification will get re emphasized.

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<v Speaker 2>So that's important. So the politics here are important.

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<v Speaker 1>Steve Weisman with us, and we will continue here. Let

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<v Speaker 1>me do a data check here with the markets and

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<v Speaker 1>the move SPX Dow records, Dow up five and forty

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<v Speaker 1>points to the solid forty two thousand print on the

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<v Speaker 1>Dow fifty seven hundred, sp up eighty six points, Nasdaq

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<v Speaker 1>one two point.

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<v Speaker 3>Steve Isison, Steve, how how concerned are you if at all?

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<v Speaker 2>We're not on right now? What's on? We're we're on,

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<v Speaker 2>We're on all. It's far radio. It's hard to tell you.

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<v Speaker 3>Yeah, the red light you make it easy the red

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<v Speaker 3>light when why, yes, that's that's for me.

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<v Speaker 2>I just learned something exactly all right, valuation.

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<v Speaker 3>How concerned are you, if at all, about this market broadly?

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<v Speaker 2>You know, I think I learned this lesson in the

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<v Speaker 2>dot com bust. So you know, when when dot com

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<v Speaker 2>was rocking and rolling, everybody was yelling and screaming about evaluation.

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<v Speaker 2>But that didn't matter until there was a recession and

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<v Speaker 2>it turned out that a lot of these companies had

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<v Speaker 2>actually fundamental problems. So I don't spend I mean, generally speaking,

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<v Speaker 2>I'm not going to invest in a company that sells

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<v Speaker 2>at one thousand PE. That's just not what I do.

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<v Speaker 2>But we'll invest in some high PE stocks. I just

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<v Speaker 2>don't feel feel like it's as long as the economy

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<v Speaker 2>is fine. It's not. It's more of an academic exercise

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<v Speaker 2>than anything else.

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<v Speaker 3>So the economy, I mean, from what we're hearing from you,

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<v Speaker 3>the economy really is underpinning almost everything. You have the foundation,

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<v Speaker 3>I guess how you view investments correct. Okay, how about

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<v Speaker 3>on the fixed income side, what do we do there?

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<v Speaker 3>I mean, I can sit in it to your treasury.

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<v Speaker 3>I used to get five percent. I'm still getting three

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<v Speaker 3>point six percent. That's not for you know, like no risk.

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<v Speaker 3>What do I got there? It takes my credit risk,

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<v Speaker 3>do you think.

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<v Speaker 2>Look, we do some corporate bond investing, but mostly what

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<v Speaker 2>we do is equities. Okay, I'm I don't have a

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<v Speaker 2>strong view on fixed income right now, one way or

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<v Speaker 2>the other. I really don't. Do you have alternatives in

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<v Speaker 2>your portfolio? I don't have alternatives either. I'm just a

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<v Speaker 2>stock jockey, stock jobs, stock and I always have been.

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<v Speaker 1>Okay, we got to talk banks here in financial with

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<v Speaker 1>Steve Iceman. Here's a quote. So, yeah, I met with

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<v Speaker 1>this retail banker yesterday and I'm supposed to be getting

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<v Speaker 1>him to invest in fun but instead I start grilling

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<v Speaker 1>him about our overdrawt penalties. And now his bank let's

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<v Speaker 1>a customer write ten twelve checks before they tell them

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<v Speaker 1>they're overdrawn, and this creep is making billions off of

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<v Speaker 1>screwing over people. This way scripted.

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<v Speaker 2>That sounds like a much younger version of me. It's

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<v Speaker 2>from the script A very angry young man, A very.

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<v Speaker 1>Angry young man from twenty fifteen. Can you buy New

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<v Speaker 1>York Big Bank? Can you buy the future of Bank

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<v Speaker 1>of America? You know, not individual stocks, But can you

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<v Speaker 1>buy the big bank success of the future.

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<v Speaker 2>So let's talk about what the positives are. The positives

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<v Speaker 2>are that the regulators did a very very good job

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<v Speaker 2>post dot frank led by vice chair Daniel Trullo, truly

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<v Speaker 2>one of the unsung heroes of the financial system. The

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<v Speaker 2>leverage in the banks is cut by more than half.

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<v Speaker 2>Even within that leverage, they have been de risked. So

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<v Speaker 2>the financial system of the United States, as far as

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<v Speaker 2>I'm concerned, is very very safe, and I don't lose

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<v Speaker 2>any sleep about it, and by the way, I sleep

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<v Speaker 2>very well. But do I think there's a great story

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<v Speaker 2>to invest in some of the very large banks. Not really.

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<v Speaker 2>I just don't think there's a story there. One way

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<v Speaker 2>or the other's too important.

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<v Speaker 1>I got to get this in lex in the Ft today,

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<v Speaker 1>blistering about private equity and the ability not to cash out.

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<v Speaker 1>Do you see potential problems within the illiquidity of private equity?

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<v Speaker 2>You know you could spend any bad tail you want.

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<v Speaker 2>I don't. There's just not enough data on what's in

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<v Speaker 2>private expert to really know one way or the other.

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<v Speaker 1>You can't make that.

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<v Speaker 2>I can't make that judgment.

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<v Speaker 1>See that you know, you know his lawyers love him,

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<v Speaker 1>can't you know, won't do individuals.

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<v Speaker 2>My lawyers love me. You know. One time, in this

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<v Speaker 2>quick story in the nineties, Oppenheimer got I was at Oppenheimer,

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<v Speaker 2>and Oppenheimer got sued over something that I had written,

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<v Speaker 2>and and there was you know, was discovery. And the

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<v Speaker 2>lawyers called me and said, send us everything you have

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<v Speaker 2>on this company that you wrote about. And I sent

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<v Speaker 2>it to them, which was only the reports that I

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<v Speaker 2>had written. And the lawyer called me and said, what

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<v Speaker 2>about your notes? And I said, I don't have notes.

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<v Speaker 2>I don't take notes. He goes, I love you.

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<v Speaker 1>Guys, thank you so much. We love you too. I

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<v Speaker 1>greatly appreciate it. Streisman, he's with Newburger Berman. Some perspectives

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<v Speaker 1>there given most interesting times