WEBVTT - Record Stocks Amid Recession Signals 0:00:13.320 --> 0:00:16.560 Hello, and welcome to What Goes Up, a Bloomber weekly 0:00:16.640 --> 0:00:20.320 markets podcast. I'm Sarah Pontac, a reporter on the cross 0:00:20.320 --> 0:00:23.079 As Set team, and I'm Mike Reagan, a senior editor 0:00:23.160 --> 0:00:25.560 on the Markets Team. This week on the show, it's 0:00:25.600 --> 0:00:28.760 the calm before the storm, at least if you're referring 0:00:28.800 --> 0:00:32.080 to next week's Federal Reserve meeting. But in the lead up, 0:00:32.440 --> 0:00:36.600 roughly one and forty companies delivered earning supports. This week, 0:00:36.760 --> 0:00:39.120 we'll break it all down, and of course we'll close 0:00:39.159 --> 0:00:41.680 out the episode with our tradition, the craziest thing I 0:00:41.720 --> 0:00:44.240 saw in markets this week, Sarah, I have a crazy 0:00:44.280 --> 0:00:47.280 thing I saw about both of our guests today. You 0:00:47.320 --> 0:00:49.479 know what it is. Neither one of these guys is 0:00:49.520 --> 0:00:53.200 on Twitter. I think they're the last two financial market 0:00:53.200 --> 0:00:55.880 professionals not on Twitter, which I think probably means that 0:00:56.000 --> 0:00:58.639 they're among the smartest out there. I admire that. I'm 0:00:58.640 --> 0:01:01.640 pretty jealous, exactly. I'd know you could not be on Twitter. 0:01:01.680 --> 0:01:04.840 I'm gonna go delete my account, I know. But let's 0:01:04.959 --> 0:01:08.199 introduce these guys to all our Twitter fans out there. First. 0:01:08.520 --> 0:01:13.319 Sean Snyder, head of investment strategy at City Personal Wealth Management, 0:01:13.319 --> 0:01:15.600 thanks for having me. I appreciate it. Also joining us 0:01:15.720 --> 0:01:18.560 is Bloomberg's Stocks team leader, and he's the author of 0:01:18.560 --> 0:01:21.200 the Taking Stock column. If you don't subscribe to that 0:01:21.280 --> 0:01:23.760 on the terminal, I I highly recommended. It's a great 0:01:24.080 --> 0:01:26.720 way to start your day reading about a lot of 0:01:26.760 --> 0:01:30.360 good color and the equity market. His name is Brad Olson. Brad, 0:01:30.400 --> 0:01:33.280 welcome to the show. Glad to be here. Sean. Let's 0:01:33.319 --> 0:01:35.959 start with you. What are you talking about with clients 0:01:36.000 --> 0:01:39.080 these days? I mean, obviously the stock markets near record highs, 0:01:39.080 --> 0:01:42.360 bond yields are low. Again, where's the opportunity? What are 0:01:42.360 --> 0:01:44.480 people interested right now? You know, sort of what is 0:01:44.520 --> 0:01:46.759 your your elevator pitch if you run into a client, 0:01:46.920 --> 0:01:49.480 uh in the elevator. I think what most clients want 0:01:49.480 --> 0:01:53.600 to know is that they hear a lot about potential recession. 0:01:53.720 --> 0:01:56.080 They also hear record highs, and it's hard for them 0:01:56.120 --> 0:01:59.760 to kind of take those two views and understand what 0:01:59.800 --> 0:02:01.720 it means. So we try and kind of walk them 0:02:01.720 --> 0:02:03.760 through that. It's also one of those times where I 0:02:03.760 --> 0:02:06.480 think it's important to tell people about having a diversified 0:02:06.480 --> 0:02:09.679 portfolio as opposed to trying to time the market. Anytime 0:02:09.720 --> 0:02:12.040 to our word comes out recession. People try and time 0:02:12.080 --> 0:02:14.160 the market, think in and out UM. If you would 0:02:14.160 --> 0:02:16.440 have got out in last December, you would have missed 0:02:16.440 --> 0:02:19.000 out on the plus games this year, right. So those 0:02:19.040 --> 0:02:21.200 are the types of things that we try and talk 0:02:21.280 --> 0:02:24.000 clients through currently. As far as opportunities, there's a lot 0:02:24.000 --> 0:02:26.800 of different UM things out there right now. Maybe U 0:02:26.840 --> 0:02:28.720 S stocks look a little bit expensive, but there are 0:02:28.919 --> 0:02:32.560 certain areas like healthcare, things that have strong earnings growth 0:02:32.919 --> 0:02:35.000 UM even in a downturn. So there are areas of 0:02:35.000 --> 0:02:37.880 pockets that you can diversify into UM. Maybe it's not 0:02:37.919 --> 0:02:40.000 going to be the stock that makes you rich UM, 0:02:40.000 --> 0:02:42.880 but it does help balance your portfolio in these uncertain times. 0:02:43.040 --> 0:02:45.000 So it seems like we've been hearing the R word 0:02:45.040 --> 0:02:49.359 recession much less and less, especially less than we heard 0:02:49.400 --> 0:02:52.600 in the fourth quarter of last year. Sure, we've got 0:02:52.680 --> 0:02:55.680 on some nice economic data. However, this week we did 0:02:55.720 --> 0:02:57.320 get some global p m I s and we saw 0:02:57.400 --> 0:03:00.560 weakness out of the Eurozone. In the US it hit 0:03:00.639 --> 0:03:03.880 fifty on the edge of contraction, lowis since two thousand nine. 0:03:04.240 --> 0:03:06.760 How do you look at the good data and the 0:03:06.760 --> 0:03:09.600 bad data, especially ahead of the FED meeting next week 0:03:10.000 --> 0:03:12.360 and kind of trying to think about what the environment 0:03:12.400 --> 0:03:15.240 is going to look like going forward from here. There's 0:03:15.280 --> 0:03:17.200 not always a clear picture, right, And you can take 0:03:17.200 --> 0:03:19.440 the p m I s and discuss, you know, what's 0:03:19.440 --> 0:03:20.919 a good p m I a bad pm If you 0:03:20.919 --> 0:03:22.919 look at the manufacturing p m I, you would say 0:03:22.960 --> 0:03:25.920 that it's it's bad, right, manufacturing sector is in a slump. 0:03:26.240 --> 0:03:27.639 And then you could take the flip side and you 0:03:27.639 --> 0:03:29.399 could say you look at the services sector and it's 0:03:29.400 --> 0:03:32.239 holding up just fine. And that gives you this mixed picture. 0:03:32.320 --> 0:03:34.920 But you should kind of think about how they both 0:03:35.000 --> 0:03:39.880 interplate together. And the manufacturing sector is not encapsulated into 0:03:39.920 --> 0:03:41.640 its own If you think of a company like a 0:03:41.640 --> 0:03:44.920 auto manufacturer, they make a car, right, but there's more 0:03:44.960 --> 0:03:46.880 to that. You think of the Super Bowl ads related 0:03:46.920 --> 0:03:49.440 to that car, the fact that that company employs an 0:03:49.440 --> 0:03:53.640 accounting service. It can eventually bleed into service sector as well. Um, 0:03:53.680 --> 0:03:57.760 it really hasn't yet. Um. And manufacturing is particularly you know, 0:03:57.840 --> 0:04:01.320 worse in Europe right now, UM, more so in the US. 0:04:01.320 --> 0:04:04.280 But those things can bleed over into other economic activity, 0:04:04.280 --> 0:04:06.280 and that's what you worry about. Yeah, it's a great 0:04:06.280 --> 0:04:08.960 point because you often hear wall services or what's seventy 0:04:09.200 --> 0:04:11.960 some percent of the economy and their consumer you know, 0:04:12.280 --> 0:04:16.080 especially so you're you're thinking, is that that manufacturing weakness 0:04:16.080 --> 0:04:18.920 can actually lead to service sector weakness and and sort 0:04:18.960 --> 0:04:22.280 of be almost a leading indicator, canary in the coal 0:04:22.320 --> 0:04:25.039 mine for the entire economy. Right, I'm not worried yet, 0:04:25.040 --> 0:04:26.640 but I think you have to watch that, and I 0:04:26.680 --> 0:04:29.640 think that that gives the FED some sort of case 0:04:29.720 --> 0:04:31.719 to make when it comes to do an insurance cut. 0:04:32.360 --> 0:04:34.960 So let's bring it to what companies are actually saying 0:04:34.960 --> 0:04:36.640 at the moment. Brad. I know you've had a an 0:04:36.640 --> 0:04:40.560 extremely busy week, the busiest of this earning season. I'm 0:04:40.560 --> 0:04:43.359 sure you've hardly slept. But if you take a step 0:04:43.360 --> 0:04:46.080 back and you look at the executive commentary that we 0:04:46.160 --> 0:04:49.520 have seen so far through this earning season, is anyone 0:04:49.760 --> 0:04:54.240 actually worried about an economic downturn? We're not seeing it yet, 0:04:54.400 --> 0:04:56.839 at least as far as the numbers are concerned. Um, 0:04:56.880 --> 0:05:00.000 just through this week, we're sales are are still surprised 0:05:00.080 --> 0:05:04.039 into the upside. Earnings are surprising even further. Um, we 0:05:04.120 --> 0:05:06.279 heard a lot of crowing leading into this earning season, 0:05:06.279 --> 0:05:10.240 amount of potential earnings recession that is yet to materialize. UM, 0:05:10.400 --> 0:05:13.680 So as far as the executive commentary, we're seeing a 0:05:13.720 --> 0:05:18.200 lot of idiosyncratic circumstances and all the way from you know, 0:05:18.240 --> 0:05:20.920 the maker of these snowmobiles, Polarists, I don't know if 0:05:21.320 --> 0:05:24.200 you know. Earlier this week they reported and their stock 0:05:24.240 --> 0:05:27.719 actually rose after sighting the tariffs and the trade concerns, 0:05:28.279 --> 0:05:31.160 just showing that if companies were you know, strong enough 0:05:31.200 --> 0:05:34.720 and it definitely navigated the circumstances, they could still be successful. 0:05:35.200 --> 0:05:36.720 On the other side, on the flip side, we're still 0:05:36.760 --> 0:05:40.960 seeing some industrial weakness. We saw CSX last last week, 0:05:40.960 --> 0:05:43.440 which is still weighing on some concerns or some the 0:05:43.480 --> 0:05:47.520 cast freight index is lower, So to that extent, there's 0:05:47.520 --> 0:05:51.359 no major thematic uh circumstances that are bleeding through. But 0:05:51.720 --> 0:05:54.520 so far, so good, I would say. I think the 0:05:54.520 --> 0:05:57.080 the interesting thing that jumped out to me just this 0:05:57.080 --> 0:05:59.960 this past week has been how semiconductors have have manned 0:06:00.080 --> 0:06:05.320 is to to navigate the Huahwei blacklisting um utilizing this loophole. 0:06:05.600 --> 0:06:08.039 Bloomberg wrote about it extensively in the last few weeks 0:06:08.400 --> 0:06:12.279 by using some of their overseas subsidiaries to basically allow 0:06:12.360 --> 0:06:14.920 them still sell through them to Hahwei despite those those 0:06:14.920 --> 0:06:17.839 trade war concerns. So we'll see we're seeing that with 0:06:17.880 --> 0:06:21.240 the socks index at the session highs um. That was 0:06:21.279 --> 0:06:23.920 a huge lift to the the SMP this week, and 0:06:24.040 --> 0:06:26.359 you know, with the smp A pushing through three thousand, 0:06:26.880 --> 0:06:29.679 it's hard to make that case, you know, Sean, getting 0:06:29.720 --> 0:06:31.800 back to what what Brad's talking about, I get the 0:06:31.880 --> 0:06:35.800 sense that investors aren't really ready right now to abandon 0:06:35.880 --> 0:06:38.120 the stock market, but it seems like there's a lot 0:06:38.120 --> 0:06:40.640 of confusion, a lot of uncertainty about where that leadership 0:06:40.680 --> 0:06:43.400 should be. You know, we saw this real strong rally 0:06:43.720 --> 0:06:48.000 in defensive stocks that is really made places like utilities 0:06:48.040 --> 0:06:49.800 look sort of like a crowded trade. I mean, a 0:06:49.960 --> 0:06:53.600 utility index in the SMP trading at twenty times earnings 0:06:53.640 --> 0:06:56.080 I think for the first time ever. Basically I saw 0:06:56.120 --> 0:06:59.080 a lot of action real estate companies. But then you'll 0:06:59.080 --> 0:07:01.040 have these days where it's seems like everyone jumps to 0:07:01.040 --> 0:07:03.360 the other side of the ship and says, oh, now 0:07:03.520 --> 0:07:06.159 the you know, everyone's too worried. Let's get back into 0:07:06.160 --> 0:07:08.760 the cyclical the growth stocks that you saw, the bank's 0:07:08.839 --> 0:07:11.440 rebound um is that a fair assessment of sort of 0:07:11.480 --> 0:07:13.960 the mentality right now that people aren't ready to throw 0:07:13.960 --> 0:07:15.720 in the town in the stocks, but there's not really 0:07:16.320 --> 0:07:18.920 much clarity on what is going to be that leadership. 0:07:19.520 --> 0:07:21.160 I think that's true. I think anytime you get the 0:07:21.200 --> 0:07:23.280 record highs, people are gonna be a little bit confused 0:07:23.280 --> 0:07:25.360 about what to move into because they all get to 0:07:25.400 --> 0:07:27.360 be more expensive when you get to record highs, and 0:07:27.400 --> 0:07:29.400 I think people are confused about whether we are headed 0:07:29.400 --> 0:07:32.320 towards the recession or not. There are indicators that point 0:07:32.400 --> 0:07:34.880 towards the recession, right The inverted deal curve is the 0:07:34.880 --> 0:07:37.880 most obvious. Everyone talks about it um that points to 0:07:37.920 --> 0:07:42.760 potential recession in mid twenty twenty, maybe early one. They're 0:07:42.800 --> 0:07:46.000 also some other indicators to the number of businesses saying 0:07:46.040 --> 0:07:47.600 that now is a good time to expand may have 0:07:47.640 --> 0:07:50.280 peeked back in may have two thousand eighteen. The initial 0:07:50.360 --> 0:07:52.800 jobless claims, which is very very timely read on the 0:07:52.840 --> 0:07:55.440 US labor market, might have peeked in the week of 0:07:55.520 --> 0:07:59.640 April nineteen. So there are some signs that maybe you 0:07:59.680 --> 0:08:01.800 could of a recession, and that's why I think the 0:08:01.880 --> 0:08:05.240 FED see some of those they don't mention it specifically, 0:08:05.280 --> 0:08:06.880 but I think they see some of this stuff and 0:08:06.920 --> 0:08:08.880 they worry a little bit about it. And that's why 0:08:08.960 --> 0:08:11.800 I think you see this move back and forth between 0:08:11.840 --> 0:08:14.720 defenses and cyclicals. If you think the economy's botting the 0:08:14.960 --> 0:08:17.320 bottoming out and you're gonna get a soft landing scenario 0:08:17.400 --> 0:08:20.800 where trade wars have subsided, the FED is now easy. 0:08:21.120 --> 0:08:24.640 That argues for cyclicals. If that doesn't happen, trade concerns 0:08:24.680 --> 0:08:27.560 come back to the roost. The FED doesn't cut rates 0:08:27.600 --> 0:08:29.880 the way we want, It's maybe not fifty basis points 0:08:29.960 --> 0:08:33.520 or whatever, then you want defenses. That labor market I 0:08:33.559 --> 0:08:36.360 think is so key. I mean, it doesn't really start 0:08:36.400 --> 0:08:39.120 to feel like a weak economy until you start seeing 0:08:39.600 --> 0:08:43.040 uh nonfarm payrolls moved down closer to zero. You start 0:08:43.040 --> 0:08:45.880 to see that unemployment rate pick up um and yet 0:08:45.920 --> 0:08:48.320 it's very much a not really a leading indicator. It's 0:08:48.360 --> 0:08:51.319 more of a lagging or coincident indicators. So what is 0:08:51.360 --> 0:08:53.319 the is job has claimed? You sort of go to 0:08:53.559 --> 0:08:57.000 way uh to to sort of figure out the outlook 0:08:57.000 --> 0:08:59.079 for for the labor market. And if so, do you 0:08:59.080 --> 0:09:01.640 look at a moving average of of four weeks or 0:09:01.640 --> 0:09:03.800 six weeks or something like that. We're do you look 0:09:03.840 --> 0:09:06.640 at some of the survey labor surveys, which what's sort 0:09:06.640 --> 0:09:09.760 of the best way for investors to wrap their head 0:09:09.760 --> 0:09:12.560 around what's expect for the labor market. By far, the 0:09:12.600 --> 0:09:15.440 easiest way is the Initial Jobless Claimed Teller comes out 0:09:15.480 --> 0:09:19.360 every Thursday at eight thirty am. Now, one week's movement 0:09:19.440 --> 0:09:21.320 is not going to tell you anything, but if you 0:09:21.360 --> 0:09:24.200 continually pay attention to and it tends to trend higher 0:09:24.200 --> 0:09:26.360 over time, and it's been doing that a little bit since, 0:09:26.400 --> 0:09:31.240 like I mentioned April ten, again, super low levels, relatively stable, 0:09:31.480 --> 0:09:34.079 no signs right now that there is a recession. It's 0:09:34.080 --> 0:09:35.480 one of the things that makes me confident that there's 0:09:35.520 --> 0:09:39.240 not a recession right now. But again it leads by 0:09:39.280 --> 0:09:42.760 maybe say twelve months. So if it continues to trend 0:09:42.840 --> 0:09:44.680 higher and higher and higher and higher, and then you 0:09:44.720 --> 0:09:46.640 get to mid two thousand twenty and all of a sudden, 0:09:47.160 --> 0:09:49.640 initial jobs seems right three thousand and you say, oh, 0:09:49.720 --> 0:09:52.160 maybe we're starting recession. So that's one thing you pay 0:09:52.160 --> 0:09:55.760 attention to. The labor surveys are also great as well. Um, 0:09:55.840 --> 0:09:57.920 if you look at the small business surveys n F 0:09:58.200 --> 0:10:01.079 by n F, I b they're a rate leading indicator. 0:10:01.480 --> 0:10:03.360 It's cooled off a little bit too, haven't they have? 0:10:03.559 --> 0:10:06.079 Small business confidence has come down now again it's still 0:10:06.120 --> 0:10:09.079 at elevated levels, but you know that's what happens when 0:10:09.120 --> 0:10:11.120 you have a peak, right and before the recession, it 0:10:11.320 --> 0:10:14.319 starts to decline. So it maybe the beginning of that decline. 0:10:14.320 --> 0:10:16.200 It doesn't mean that we're there, doesn't mean we are 0:10:16.320 --> 0:10:18.959 at our recessions. Just like those initial jobless names. Maybe 0:10:19.200 --> 0:10:21.800 botting Mountain April doesn't mean we're at a recession, but 0:10:21.880 --> 0:10:24.440 those maybe signs that you're headed towards the recession. And 0:10:24.480 --> 0:10:27.680 I will add that initial jobless GLAMs did fall this 0:10:27.800 --> 0:10:31.480 Thursday shirts just one week, but that does underpin that 0:10:32.000 --> 0:10:33.960 the case that we have a pretty strong labor market. 0:10:34.120 --> 0:10:36.080 I want to come back to the earning season as 0:10:36.120 --> 0:10:38.560 a whole sean because if you look at a benchmark level, 0:10:38.600 --> 0:10:41.640 shure companies are beating. The majority are, but they pretty 0:10:41.720 --> 0:10:44.360 much always do because they come in with low expectations. 0:10:45.040 --> 0:10:47.000 But if you look further out, if you look at 0:10:47.040 --> 0:10:49.640 the third quarter, in the fourth quarter, we're now starting 0:10:49.679 --> 0:10:53.280 to see those estimates come down. Also full your nineteen 0:10:53.400 --> 0:10:56.760 estimates and also next year's estimates as well. Can the 0:10:56.840 --> 0:10:59.559 market continue to trend higher if we continue to see 0:10:59.840 --> 0:11:03.199 the at least at this point slight deterioration in earnings 0:11:03.360 --> 0:11:05.080 estimates for the rest of the year and for the 0:11:05.080 --> 0:11:07.720 two years ahead. It's a bit of a tricky question. 0:11:07.760 --> 0:11:11.760 I guess it's my job to answer that. Sorry. I 0:11:11.840 --> 0:11:14.480 think the answer is they can go higher just based 0:11:14.520 --> 0:11:17.320 on the idea of all this stimulus coming into the market. 0:11:17.679 --> 0:11:19.800 It's not just the Fed cutting rates, but you're getting 0:11:19.840 --> 0:11:22.920 some monetary stimulus through that avenue through a rate cut 0:11:22.960 --> 0:11:26.320 which is almost guaranteed to happen next Wednesday. But you're 0:11:26.320 --> 0:11:29.720 also seeing increased fiscal spending by the government, right so 0:11:29.800 --> 0:11:32.000 that the new budget deal, if it passes, I think 0:11:32.040 --> 0:11:34.520 contributes maybe. And you'd have to fact check me on this, 0:11:34.559 --> 0:11:36.520 don't please, don't quote it's an exact thing, but I 0:11:36.520 --> 0:11:40.560 think it's about forty four billion dollars of increased federal 0:11:40.600 --> 0:11:44.280 spending next year. Those types of things canned into the 0:11:44.280 --> 0:11:46.640 market and increase asset prices. And the one thing you 0:11:46.720 --> 0:11:48.960 might see from the Fed cutting rates is not necessarily 0:11:48.960 --> 0:11:50.760 boost the economy, but you might see a boost of 0:11:50.800 --> 0:11:54.199 risk assets, which is essentially what we've seen since two 0:11:54.200 --> 0:11:56.959 thousand nine, right, the stock market has done better than 0:11:57.000 --> 0:11:58.920 the economy in general. I mean, now we're getting to 0:11:58.920 --> 0:12:01.280 the point where maybe the economy astro stock market. But 0:12:01.800 --> 0:12:04.520 and from what I've read cities sort of house view 0:12:04.640 --> 0:12:09.000 is that you're expecting a quitter point cut next week 0:12:09.240 --> 0:12:12.000 at the end of July when the Fed meets. Everyone 0:12:12.080 --> 0:12:15.640 is using the catchphrase insurance cut, you know, meaning, uh, 0:12:15.800 --> 0:12:18.600 this might be one and done, maybe two cuts. What 0:12:18.760 --> 0:12:21.120 you're thinking on that, I mean is the market's going 0:12:21.160 --> 0:12:25.120 to sort of have a temper tensionum almost for you know, 0:12:25.240 --> 0:12:29.080 more than that for a continued using cycle. Where will 0:12:29.280 --> 0:12:31.920 one cut satisfy people, do you think or two cuts? Say, 0:12:32.480 --> 0:12:34.840 I think two cuts would probably satisfy the market. I 0:12:34.880 --> 0:12:36.560 think they might even be looking deeper than that. But 0:12:36.600 --> 0:12:39.760 I think our expectations July and September, you know, I 0:12:39.760 --> 0:12:41.720 think you call it an insurance cut. In the idea 0:12:41.760 --> 0:12:44.040 of insurance is a great thing. We all have it. 0:12:44.040 --> 0:12:46.040 But sometimes you get in an accident and the fact 0:12:46.040 --> 0:12:48.599 that you have insurance doesn't uh, you know, negate the 0:12:48.600 --> 0:12:50.680 fact that you've got a horrible accident that changed your life. 0:12:51.080 --> 0:12:52.880 I think the FED is somewhat the same way. I 0:12:52.920 --> 0:12:55.679 think there has been historical examples where they did an 0:12:55.679 --> 0:12:58.280 insurance cup and we had a soft landing and we 0:12:58.360 --> 0:13:01.400 moved on and we avoided resas and things were fine 0:13:01.480 --> 0:13:04.320 right exactly. But in two thousand one, two seven, we 0:13:04.360 --> 0:13:06.319 didn't avoid the accident and we when it fell into 0:13:06.360 --> 0:13:09.680 recession anyways. Um, And that's the type of scenario we 0:13:09.800 --> 0:13:12.439 are clearly hoping to avoid. And I think that's also 0:13:12.480 --> 0:13:15.439 adding to the confusion that you're talking about people moving 0:13:15.440 --> 0:13:18.320 in between defenses and cyclicals and that kind of stuff. 0:13:18.720 --> 0:13:21.400 What really matters is what happens from here on out 0:13:21.480 --> 0:13:25.320 after the FED cuts. Do the data continue to deteriorate 0:13:25.800 --> 0:13:27.880 or do they stabilize and start to pick up a 0:13:27.920 --> 0:13:29.960 little bit. Brad, I want to come back to you 0:13:30.000 --> 0:13:31.920 because not only does your team look at every single 0:13:31.920 --> 0:13:35.559 company that reports earnings, you guys also read every single 0:13:35.880 --> 0:13:39.400 Street note that comes out essentially, and I want to 0:13:39.440 --> 0:13:41.760 get your sense when you look into aggregate at the 0:13:41.760 --> 0:13:44.360 Wall Street chatter, just notes that are coming out, do 0:13:44.480 --> 0:13:47.040 they get the sense that the markets are getting fatigued 0:13:47.520 --> 0:13:51.200 at these levels? And is an insurance cut if we 0:13:51.240 --> 0:13:52.720 want to call it that? At this point in time 0:13:53.360 --> 0:13:56.559 enough to help ease any fatigue that may be settling 0:13:56.559 --> 0:13:59.800 in Well, I think it's absolutely paramount that I kind 0:13:59.800 --> 0:14:02.520 of or just from what I'm just from when I'm reading, 0:14:02.520 --> 0:14:05.000 I think there's an interesting some interesting research about how 0:14:05.080 --> 0:14:07.880 credit credit sweez actually is taking this to the the 0:14:07.920 --> 0:14:11.520 Devil's Advocate view where they they've actually said every time 0:14:11.559 --> 0:14:14.160 the rates actually fall the tenure. For example, I think 0:14:14.160 --> 0:14:18.080 in the song as yields full shares actually aren't responding 0:14:18.120 --> 0:14:20.840 and kind they actually there is no one to one 0:14:21.240 --> 0:14:25.000 corollary there, which I thought was an interesting view. I mean, 0:14:25.240 --> 0:14:26.920 the market needs the cut and it has to have 0:14:26.960 --> 0:14:29.760 the cut to continue to move any higher um, as 0:14:30.000 --> 0:14:32.800 Sean indicated. But at the same time, there is some 0:14:32.840 --> 0:14:35.200 research to show, at least on the short term basis, 0:14:35.360 --> 0:14:38.000 it's not always as cut and dry as it seems. 0:14:38.560 --> 0:14:40.680 And you know, with S and PD around three thousand, 0:14:40.720 --> 0:14:44.280 that's either at or above a lot of the streets forecasts. 0:14:44.840 --> 0:14:47.280 I mean, are we any idea and Sean maybe you 0:14:47.280 --> 0:14:49.160 have ideas on this or we're gonna start seeing that, 0:14:49.520 --> 0:14:52.400 uh those forecasts go up, get get them in before 0:14:52.440 --> 0:14:54.360 the end of the year, I guess, or you know, 0:14:54.680 --> 0:14:57.320 I know, Sean, you don't have to, you're not responsible 0:14:57.360 --> 0:14:59.960 for an official forecast, but would you you know, if 0:15:00.000 --> 0:15:01.760 you where would you be itching to move it up 0:15:01.800 --> 0:15:05.000 right now or would you be holding firm. What's interesting 0:15:05.080 --> 0:15:07.920 is our SMP five hundred target for a year end 0:15:07.960 --> 0:15:09.520 this year, and I don't set that. It's set by 0:15:09.520 --> 0:15:14.520 your chief US equity strategist, Bias Lefkovichift so we're so 0:15:14.520 --> 0:15:16.440 we're below that, So you could argue that it should 0:15:16.440 --> 0:15:19.480 be raised. But at the same time you mentioned this 0:15:19.600 --> 0:15:22.560 potential earnings we set where earnings for two twenty or 0:15:22.560 --> 0:15:25.960 potentially too high. UM consensus is looking for ten percent 0:15:25.960 --> 0:15:29.280 earnings growth next year. We're looking for five percent. So 0:15:29.400 --> 0:15:31.480 we think eventually the market kind of realizes that and 0:15:31.480 --> 0:15:33.080 it kind of comes back down to we are that 0:15:33.200 --> 0:15:36.000 that's our view for now. That said, we did start 0:15:36.040 --> 0:15:40.560 the year with a target of thirty and lowered it 0:15:40.640 --> 0:15:46.080 after November December time frame win markets, So to get 0:15:46.080 --> 0:15:48.760 the thirty one clearly not out of the realm possibility. 0:15:48.760 --> 0:15:52.000 Given we thought that back in January yoked kind of 0:15:53.080 --> 0:15:55.960 kind of bullish. It looked very it looked very aggressive 0:15:56.040 --> 0:15:57.840 when they put it out, and we've made it there 0:15:57.880 --> 0:15:59.720 a little bit over halfway through the year, and I 0:15:59.760 --> 0:16:01.920 think only in a couple more strategists. I think maybe 0:16:02.520 --> 0:16:04.680 maybe three strategists or so that still have to have 0:16:04.720 --> 0:16:08.040 targets above where we are, but it's not that we're 0:16:08.160 --> 0:16:10.480 very close at the top. I don't think people expected 0:16:10.520 --> 0:16:13.080 the FED to pivot like this. That is, that is 0:16:13.120 --> 0:16:32.280 why their targets are due well right. No one seemed 0:16:32.320 --> 0:16:35.080 like they were ready for the FED to pivot as 0:16:35.120 --> 0:16:37.960 they did. Something that people were coming into maybe a 0:16:38.000 --> 0:16:40.400 little bit more prepared for this week was we also 0:16:40.520 --> 0:16:44.120 heard from the European Central Bank, we heard from Mario Draggy, 0:16:44.600 --> 0:16:47.760 and a lot of people actually thought that they could 0:16:47.760 --> 0:16:51.200 potentially cut rates this week. That didn't happen. They very 0:16:51.280 --> 0:16:53.440 much set up the case for September. Also the restart 0:16:53.440 --> 0:16:57.400 of QUI, also their tearing system, but it seems like 0:16:57.440 --> 0:16:59.880 it's still didn't live up to the expectations. Why not 0:17:00.000 --> 0:17:02.960 Seohn I think that in outline the details the way 0:17:03.000 --> 0:17:05.439 some were hoping for. And then I think primarily the 0:17:05.480 --> 0:17:08.840 fact that he said um dragging in particular said that 0:17:09.240 --> 0:17:11.600 the odds of a recession in that region are still low, 0:17:11.680 --> 0:17:13.720 and I think that set the expectation that may be 0:17:13.920 --> 0:17:17.720 expectations for UM what my comment September is too high, 0:17:17.800 --> 0:17:20.440 and I think that is also kind of playing through 0:17:20.520 --> 0:17:23.840 to people's expectations for the Federal Reserve, thinking that maybe 0:17:23.880 --> 0:17:25.680 we were going to get a fifty basis point cut 0:17:25.720 --> 0:17:28.200 next week. But if Mario Drogg is not that concerned 0:17:28.200 --> 0:17:31.400 about Europe, which is looking worse than here, then maybe 0:17:31.400 --> 0:17:33.800 the Fed's not as concerned as they were hoping for. 0:17:34.640 --> 0:17:38.040 It sounds bad, right, you should be hoping pretty bad situation, 0:17:38.160 --> 0:17:44.159 but market different. Before we get to the craziest thing 0:17:44.200 --> 0:17:46.600 that we all saw in markets this week, Brad, I 0:17:46.640 --> 0:17:48.480 want to put the spotlight on you. If you look 0:17:48.640 --> 0:17:51.120 back at earning season so far, what would you say 0:17:51.320 --> 0:17:54.359 have been the big standouts, whether that means a good 0:17:54.400 --> 0:17:58.800 standout or pretty bad standout. Boeing jumps out to me, 0:17:59.200 --> 0:18:02.120 it's still a story. We thought it was gonna pass 0:18:02.160 --> 0:18:04.720 for a while, UM, and then there was that surprise 0:18:04.840 --> 0:18:07.320 charge that we saw that they came out with right 0:18:07.320 --> 0:18:10.320 ahead of their earnings, which led analysts to scramble to 0:18:10.359 --> 0:18:13.479 adjust their their estimates. When their earnings came out. There 0:18:13.520 --> 0:18:15.560 was a little bit of indecision, you know from the 0:18:15.720 --> 0:18:18.800 from investors alike. You know, where we expecting this, where 0:18:18.800 --> 0:18:22.520 we're not expecting this. The estimates hadn't caught up yet. Um. 0:18:22.560 --> 0:18:25.000 I think even with some of the airline's results and 0:18:25.080 --> 0:18:28.919 some of the I guess provisions that American Airlines has 0:18:29.000 --> 0:18:32.359 made and and Southwest, which is the largest user I 0:18:32.400 --> 0:18:35.760 believe of the seven thirty seven max. Um. You know, 0:18:35.800 --> 0:18:38.640 there we're seeing some some various impacts there. I think 0:18:38.640 --> 0:18:41.160 American Airlines is on the on the on the down 0:18:41.440 --> 0:18:44.880 side of that, I think the Southwest is actually recovered. Um. 0:18:44.920 --> 0:18:47.199 They're making the special provisions to account for some of 0:18:47.200 --> 0:18:49.520 the seven thirty seven max grounding. That's the that's still 0:18:49.520 --> 0:18:52.639 a big story, huge impact there. That's you know, we 0:18:52.680 --> 0:18:55.600 thought that was gonna kind of subside. UM. I think 0:18:55.600 --> 0:18:58.639 another interesting story was was was three M you know 0:18:58.800 --> 0:19:02.720 that one of the largest losses and investor capital in 0:19:02.760 --> 0:19:05.440 that name in thirty some odd years last quarter and 0:19:06.000 --> 0:19:10.240 you know, results on on Thursday actually sways some of 0:19:10.240 --> 0:19:14.440 those concerns. But nevertheless, you know, share still came under pressure. 0:19:14.520 --> 0:19:17.000 So there's a lot still you know, three M makes 0:19:17.080 --> 0:19:19.440 everything in the economy, right, So if we're talking about 0:19:19.480 --> 0:19:22.720 the recessionary outlook. They have their their finger on the 0:19:22.760 --> 0:19:24.800 on the pulse of just about everything from post It's 0:19:24.840 --> 0:19:29.439 to the automotive market um to healthcare diverse? Does that 0:19:29.480 --> 0:19:32.680 mean we can get to the craziest thing I saw? Market? 0:19:31.440 --> 0:19:35.840 I think you missed it. What was the craziest thing 0:19:35.880 --> 0:19:40.000 last week? Did your anoint a winner? Did an annoint winter? 0:19:40.560 --> 0:19:43.160 That leaves the road wide open for you guys? Sehan? 0:19:43.200 --> 0:19:44.800 Did they tell you about our gimmick here that I 0:19:44.800 --> 0:19:50.119 didn't know you could win? Sometimes we have Sometimes everyone's 0:19:50.119 --> 0:19:53.879 a winner, everyone gets a participation trophy. That's right, Sarah 0:19:53.920 --> 0:19:56.080 is a millennial after all. Yeah, it's true. All right, 0:19:56.119 --> 0:19:58.240 let's start with you, Sarah, What do you got so? 0:19:58.760 --> 0:20:03.120