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Speaker 1: Bloomberg Audio Studios, podcasts, radio News.

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Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and

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Speaker 2: Tim Stenebeck on Bloomberg Radio. As alex Semanova reminded all

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Speaker 2: of us yesterday, bears have had a tough time over

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Speaker 2: the last few weeks, this epic rally seventeen percent in

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Speaker 2: the S and P five hundred since the end of March.

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Speaker 2: One of those bears is Thomas Thornton. He's president of

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Speaker 2: Hedge Fund Telemetry. He joins us here in the Bloomberg

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Speaker 2: Business Week studio. Also with us as Andrew Alexander Semenova,

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Speaker 2: she's Bloomberg News Stocks reporter. Good to have you both

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Speaker 2: with us. Tom, I just want to start with you.

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Speaker 2: I first of all, thank you for coming on. I

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Speaker 2: love the ivs you've sent me all the time with

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Speaker 2: the technicals pointing out what you're seeing in the market,

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Speaker 2: So it's good to have you on set. You see

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Speaker 2: a lot of risks out there right now. What are

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Speaker 2: you seeing that you think other people are ignoring?

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Speaker 1: Well, I think the biggest risk right now is positioning, clearly,

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Speaker 1: and I'll start at the top. The Bank of America

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Speaker 1: Global Fund Manager Survey came out yesterday and it showed

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Speaker 1: that equity exposure is at the highest level ever. I mean,

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Speaker 1: we're going back to two thousand. So we then drill

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Speaker 1: down and say, well, where's everybody you know in this market?

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Speaker 1: Technology versus the SMP made a new relative high with

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Speaker 1: the SMP. Okay, great, no other index did or sector did.

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Speaker 1: That's a troubling first, you know, clue right there. And

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Speaker 1: then if you run the Semiconductor Index versus the xl K,

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Speaker 1: which is the technology ETF, you see that semis have

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Speaker 1: clearly done it in you know, magnificent form since the

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Speaker 1: beginning of the quarter. Then if you think about Goldman Sachs,

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Speaker 1: they just their prime brokerage business. They put out great

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Speaker 1: data and they said that almost twenty percent of their clients,

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Speaker 1: hedge fund and the institutional investors are weighted towards semiconductors.

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Speaker 3: Okay, that's a lot.

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Speaker 1: Now, if you think about the d ram ETF, it's

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Speaker 1: ten billion dollars apparently today, maybe it's a little bit

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Speaker 1: more today, but in six weeks, ten billion dollars is

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Speaker 1: a record. Now, this is not necessarily normal behavior, and

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Speaker 1: these are not necessarily normal long term ETFs being set

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Speaker 1: up now Korea. I'm reading about Korean's ages fifty to

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Speaker 1: sixty plus that are turning in their life insurance policies

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Speaker 1: to buy the Korean market that has gone parabolic. Fifty

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Speaker 1: percent of the Korean market are two stocks, their memory stocks,

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Speaker 1: Samsung and sk Heinex. Now these Koreans, the leverage ratios

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Speaker 1: are off the charts. So not only are they spec

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Speaker 1: in their markets after a big run, it's very narrow

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Speaker 1: and to me, I think positioning Trump's fundamentals right now.

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Speaker 1: The fundamentals Every semiconductor technician or i'm CEO will say, oh,

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Speaker 1: they're great, everything's great. You know, we've got a long

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Speaker 1: lead time. They say that every cycle. Maybe this cycle's

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Speaker 1: gone a little longer. I'm guilty of thinking that it

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Speaker 1: would end. So that's where people are. The boat is

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Speaker 1: a great boat, but everybody's on one side and it

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Speaker 1: can still tip over.

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Speaker 4: You mentioned Tom, all these areas of the market where

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Speaker 4: things are getting euphoric, the dimtf Korean equities. We're also

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Speaker 4: getting SpaceX going public at a time where things are

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Speaker 4: already looking a little bit too enthusiastic. What does this

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Speaker 4: add to that existing euphoria and does that make you

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Speaker 4: more concerned. We also have a pipeline of other mega

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Speaker 4: IPO's open Ai anthropic. What is that telling you?

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Speaker 1: Well, a lot of the valuations are sort of made up,

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Speaker 1: and if you think about they've made up the XAI

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Speaker 1: two hundred and fifty billion dollars. They merged it with SpaceX.

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Speaker 1: Of course Elon Musk is the largest holder of both,

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Speaker 1: so he gets more power. You had eleven of the

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Speaker 1: partners at XAI leave, you had eighty programmers leave. I'm

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Speaker 1: not quite sure what is there for two hundred and

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Speaker 1: fifty billion, but the IPO will probably work. It's a

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Speaker 1: small float, and the small float IPOs tend to go up.

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Speaker 1: Everybody gets excited about it, but the valuation doesn't make

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Speaker 1: any sense to me in this decade, so I'm not

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Speaker 1: going to be buying it at all.

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Speaker 3: And it could go up. Everybody loves Elon. They'll probably

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Speaker 3: merge with Tesla.

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Speaker 1: Tesla's business is starting to falter, so it all just

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Speaker 1: sort of makes sense for Elon.

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Speaker 5: You were talking about positioning and how that's driving a

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Speaker 5: lot of the equity market gains that we've seen, and

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Speaker 5: I'm curious how you kind of see that ending because

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Speaker 5: it seems like what you're saying is the reason why

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Speaker 5: shrug stocks have kind of shrugged off the rate rise,

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Speaker 5: the volatility, and oil is because people are continuing to

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Speaker 5: pile into the market. How do we know when people

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Speaker 5: will stop doing that.

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Speaker 1: One of the things that is actually gives me a

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Speaker 1: little hope is that we're starting to see a lot

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Speaker 1: of stocks hit new fifty two week lows. And again,

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Speaker 1: the technician nerds that I'm talking with, like the Jonathan

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Speaker 1: Krinsky's out there, we're all looking at you know, seeing

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Speaker 1: more new fifty two week lows than highs. And that's

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Speaker 1: remarkable because the SMP is up around twenty four percent

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Speaker 1: year over years, So if you're seeing new fifty two

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Speaker 1: week lows, things underneath are really a little shaky. So

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Speaker 1: I think there's going to be some sectors and ideas

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Speaker 1: that make sense to buy that the value get to

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Speaker 1: levels that you can do.

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Speaker 2: We're going to get a read on Nvidia after the

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Speaker 2: close today, and I think that will set a big

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Speaker 2: part of the conversation moving forward for a lot of

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Speaker 2: these companies. But if we go and out of those

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Speaker 2: words that nobody should ever utter, which is is this

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Speaker 2: time different? Then maybe we think about it in the

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Speaker 2: context of productivity gains and productivity increases as a result

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Speaker 2: of this technology, which some have called, you know, a

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Speaker 2: new industrial revolution. Is that wrong?

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Speaker 1: No. I think that AI is here, it's you know,

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Speaker 1: it's fascinating, it's getting better.

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Speaker 2: But it's overvalued.

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Speaker 1: I think there are certain places that show overvaluation. And

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Speaker 1: I think the biggest bottleneck for this, well, there's a

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Speaker 1: couple funding all the buildouts. There's a lot of circular stuff.

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Speaker 1: A lot of people have talked about that, but I

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Speaker 1: think the main one is powering the data centers, and

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Speaker 1: I still think that that is going to be the

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Speaker 1: difficult thing to turn on the lights. You can build

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Speaker 1: out the data center, but you really need more power,

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Speaker 1: and power plants take time to build, take time for approvals.

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Speaker 1: So I think that if anything starts to wobble in this,

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Speaker 1: you might see some pushouts as far as when the

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Speaker 1: data centers are going to get built again, the funding issues.

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Speaker 3: Higher rates, that's not helping.

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Speaker 1: Private credit stuff is still out there as a risk,

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Speaker 1: So that would be the one thing I'm watching right now.

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Speaker 4: It feels like people continue to be unanimously bullish despite

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Speaker 4: all these risks that we're all very aware of what

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Speaker 4: has it felt like for you to be a contrarian?

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Speaker 4: How painful has it been.

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Speaker 3: I've aged twenty years.

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Speaker 1: In the last six weeks, I can say that my

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Speaker 1: P and L has not benefited, It's really suffered. But

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Speaker 1: I also know that since I've been in the markets

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Speaker 1: a long time, I've seen these things happen. They tend

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Speaker 1: to stretch a little longer like this one. But when

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Speaker 1: you see the narrowness of where people are, you see

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Speaker 1: the type of people that are buying these things late

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Speaker 1: after a big move. I have confidence that I'll be

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Speaker 1: proven right. And you know it's not that I'm you know,

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Speaker 1: overly bearish all the time. I do find times where

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Speaker 1: I get overly bullish.

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Speaker 2: What does right look like to you?

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Speaker 3: What do you mean by the like.

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Speaker 2: You said to you, you'll be proven right over time?

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Speaker 5: Well?

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Speaker 3: What is that?

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Speaker 2: Does the S and P five hundred have to fall

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Speaker 2: to a certain level for you to feel like you've

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Speaker 2: been proven right? Does Nvidia's valuation have to fall? Where

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Speaker 2: does that manifest?

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Speaker 5: Well?

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Speaker 1: I think that just because of the positioning right now,

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Speaker 1: I think there could be a catchdown to where the

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Speaker 1: rest of the market is. And it's not necessarily saying

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Speaker 1: that businesses are under you know.

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Speaker 3: Are bad or something really bad is happening.

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Speaker 1: I just think that people will see and maybe panic

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Speaker 1: and sell and lovered again. So I think that's kind

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Speaker 1: of where I see things. And you know, I was

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Speaker 1: covering part of my own Nvidia is short at the lows.

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Speaker 1: I covered, you know, some of my technology stuff. Semiconductors.

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Speaker 1: I didn't cover enough. Let's just you know, I want to.

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Speaker 3: But but you.

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Speaker 1: Know that that's it's been rather extraordinary when you had

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Speaker 1: eighteen days in a row of the semiconductors going up.

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Speaker 3: I I seriously was, you know, questioning things myself life.

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Speaker 2: You know, you're getting philosophical. Look, I don't think you're

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Speaker 2: the you're the only one right now. There are certainly

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Speaker 2: a lot of vocal bulls out there, and we appreciate, uh,

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Speaker 2: the way you're thinking about things and you're sharing it

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Speaker 2: with us. On Bloomberg Business Week Daily, A big thank

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Speaker 2: you to Thomas Thorton, president of Hedge Fund Telemetry. Also

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Speaker 2: Alexander Semonova, Bloomberg News US Stocks reporter,