WEBVTT - Single Best Idea with Tom Keene: Jeffrey Rosenberg & Brian Belski

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news the single best idea.

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<v Speaker 1>Shout out to Robin Wigglesworth. Bloomberg does a great job

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<v Speaker 1>as this as well, but Robin's the one at the

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<v Speaker 1>FT that sort of codified it, which is the comedy

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<v Speaker 1>act of keeping track of the annual outlooks. Here's the

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<v Speaker 1>way it works, folks, in the vicinity of October. If

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<v Speaker 1>you have the same marketing staff within investment research, you

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<v Speaker 1>go through the exitd you go to the ballet again,

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<v Speaker 1>and you have some meetings, and you get your outlook,

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<v Speaker 1>and you write a draft and fourteen people look at it.

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<v Speaker 1>Usually et cetera, et cetera, et cetera. Maybe it's a

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<v Speaker 1>PowerPoint virginny masin if today had a brilliant PowerPoint very

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<v Speaker 1>valuable from Alion's. And then you can have a seven

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<v Speaker 1>page outlook or dare I say a thirty seven page outlook.

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<v Speaker 1>The nightmare is when you get a new marketing team

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<v Speaker 1>on Wall Street, because they have to prove themselves, and

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<v Speaker 1>so in October the new marketing team at any given

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<v Speaker 1>firm is going mental about they got to have the

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<v Speaker 1>one investment outlook to be all and end all, and

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<v Speaker 1>Robin over at the ft keeps track of like I

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<v Speaker 1>don't know twenty thirty forty of these outlooks is they

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<v Speaker 1>go into the new year and everyone knows, including the

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<v Speaker 1>entire Bloomberg surveillance team, they're useless. I mean, basically, I'll

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<v Speaker 1>be polite and say John Ferrell talks about the end

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<v Speaker 1>of March. Maybe you get to the end of February

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<v Speaker 1>and they seem ancient. What was written on December twentieth

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<v Speaker 1>to take a to pick a date as well. What

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<v Speaker 1>we try to do is move away from the outlooks

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<v Speaker 1>more to the discussion. We begin with Jeffrey Rosenberg of

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<v Speaker 1>Black Rock here talking about the nuances of the yield

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<v Speaker 1>curve of if the two year moves, the ten year

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<v Speaker 1>might not.

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<v Speaker 2>You guys will remember the old greens band cut undrum.

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<v Speaker 2>Right then he was raising rates, but long term rates

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<v Speaker 2>weren't going up. They were going down because back then

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<v Speaker 2>China was rebalancing, not rebouncing, reinvesting all of his trade

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<v Speaker 2>surpluses back into treasuries, and we couldn't understand why the

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<v Speaker 2>Fed couldn't control long term interest rates. So I've talked

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<v Speaker 2>about the possibility that we could see the new conundrum.

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<v Speaker 2>What's the new conundrum is here we're cutting interest rates

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<v Speaker 2>in the short end, but the long end isn't responding.

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<v Speaker 2>That's exactly what happened in August, right, we cut interest

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<v Speaker 2>rates fifty basis points, the long end went up. And

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<v Speaker 2>I think when you look into twenty twenty five, right,

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<v Speaker 2>we've taken down the amount of cuts that the Fed

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<v Speaker 2>is expected, but they're still expected to cut rates and

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<v Speaker 2>if they do, and this is what yesterday's inflation print

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<v Speaker 2>is kind of worrisome is we're kind of getting into

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<v Speaker 2>the consensus around this sticky inflation. Okay, so why are

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<v Speaker 2>they cutting next month not next month, next week? Because

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<v Speaker 2>they want to support the job market and the concerned

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<v Speaker 2>about the tightening. So they're showing their hand that there's

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<v Speaker 2>a little bit of preference for the labor market over

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<v Speaker 2>the inflaew Okay, Well that's a problem for the rate

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<v Speaker 2>cutting cycle because you can cut the front end, but

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<v Speaker 2>the back end may be more worried about that sticky

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<v Speaker 2>inflation and worried about some of those longer term issues

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<v Speaker 2>around debt and deficits in the fiscal policy side.

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<v Speaker 1>An extended conversation with Jeffrey Rosenberg of Blackrock program note

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<v Speaker 1>for those of you listening to single Best Idea on

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<v Speaker 1>this Thursday tomorrow, Gene Munster and Dan ives together on

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<v Speaker 1>MAG seven. Really looking forward to that, and yes I

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<v Speaker 1>usually don't, but I'm going to you gotta focus on

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<v Speaker 1>Tesla right now as a moonshot. We'll probably lead off

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<v Speaker 1>talking about Tesla with Munster and Eyes. We'll do that tomorrow.

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<v Speaker 1>On the equity markets, there's different characters, not of permables,

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<v Speaker 1>but bulls writing with a certain force, a certain intelligence,

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<v Speaker 1>and one of those clearly is Brian Belski of BEMO Capital.

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<v Speaker 1>He was on Fired Today intercourse. Deserves to be within

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<v Speaker 1>this great bull market. He talks about the factor. He's

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<v Speaker 1>not a big fan. He's looking at fundamental things like

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<v Speaker 1>earning's growth, free cash flow growth on momo momentum, Belski

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<v Speaker 1>of Bemo.

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<v Speaker 3>One of the things that quite frankly drives us crazy

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<v Speaker 3>is everyone talking about this momentum investing. But if you

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<v Speaker 3>go back to nineteen ninety in the US DOC market,

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<v Speaker 3>you look at rolling returns, the best five factors, which

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<v Speaker 3>your almost talk about factors are fundamental. Number one is

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<v Speaker 3>low price, but the rest of them are price to

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<v Speaker 3>free cash flow, enterprise. Valey toe, but earning's growth increasing

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<v Speaker 3>over the next three months, so I think we're returning

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<v Speaker 3>to that slowly, which again favors amazing assets here in

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<v Speaker 3>the United States, and that's why we're overweight technology, financials,

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<v Speaker 3>and consumer discretionary in a little bit in the communication

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<v Speaker 3>services area, especially considering those are the growth areas. But

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<v Speaker 3>really from a consistency of growth bases, Tommy, they're the

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<v Speaker 3>most consistent growers.

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<v Speaker 1>I mean, Brian Belski, they're calling me Tommy. I mean

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<v Speaker 1>my mother called me Tommy. Usually I was in trouble

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<v Speaker 1>when I was Tommy. Brian Belski of BMO Capital Markets

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<v Speaker 1>on your commute across this station on Bloomberg Radio, Apple, CarPlay, Android, Atto,

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<v Speaker 1>start up at Mount Catada in Mount Washington on down

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<v Speaker 1>WBOS ninety two to nine FM, Boston. Humbled by the

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<v Speaker 1>initial responsor, thank you so much, Greater New England for

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