WEBVTT - Boeing, Copper, and Weight Loss 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.600 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market Moven News. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:55.600 --> 0:00:56.120 Let's get to. 0:00:56.080 --> 0:01:00.360 George Ferguson right now, because he is the expert on 0:01:00.360 --> 0:01:02.200 on aerospace on the airlines. 0:01:02.280 --> 0:01:03.680 He's from Bloomberg Intelligence. 0:01:04.520 --> 0:01:07.200 Georgie, again, we were just saying it just seems like 0:01:07.440 --> 0:01:11.920 Boeing just emerge from the doghouse in the last six 0:01:11.959 --> 0:01:14.600 to twelve months, and here we are yet again. How 0:01:14.720 --> 0:01:18.840 serious is this issue relative to the last seven three 0:01:18.920 --> 0:01:20.080 seven max issue? 0:01:21.520 --> 0:01:23.680 So, I mean, I think if you're talking about the 0:01:25.160 --> 0:01:28.120 other challenges they've had with sort of a rear pressure 0:01:28.200 --> 0:01:32.720 bulkkant problems and vertical stabilizers, I think I put it 0:01:32.920 --> 0:01:35.319 right along the lines, is a very similar issue, and 0:01:35.360 --> 0:01:39.920 it's a lack of attention to detail in the manufacturing process, 0:01:40.040 --> 0:01:44.520 either at Boeing or at their suppliers, especially Spirit Aerosystems. 0:01:45.000 --> 0:01:47.280 It's been really nagging them and they've got to go. 0:01:47.520 --> 0:01:49.600 They've got to get down there at Spirit and they've 0:01:49.640 --> 0:01:52.360 got to help them knit this in the bud and 0:01:52.520 --> 0:01:55.800 stabilize production so they can build all those airplanes they're 0:01:55.800 --> 0:01:58.640 supposed to build this year and continue to recovery. 0:01:58.920 --> 0:02:00.000 If you ask me if it's. 0:01:59.800 --> 0:02:02.680 How is it similar to the mcast problem where the 0:02:02.680 --> 0:02:06.880 two airplanes crashed to the Ethiopian and Malaysian airplane airplanes. 0:02:08.040 --> 0:02:11.440 This doesn't appear right now to be anywhere near as serious. 0:02:11.680 --> 0:02:14.480 I think this will be a singular anominate when we're 0:02:14.520 --> 0:02:17.440 all done. But again, a sign of lack of attention 0:02:17.480 --> 0:02:20.880 to detail in the manufacturing process, which can't go on 0:02:21.120 --> 0:02:21.840 in aerospace. 0:02:22.160 --> 0:02:24.480 Hey, George, give us some size and scope when it 0:02:24.520 --> 0:02:28.000 comes to which airlines fly this model the most and 0:02:28.120 --> 0:02:30.279 how many of these planes are worldwide? 0:02:31.400 --> 0:02:35.080 Yeah, so, I mean this model is relatively sort of 0:02:35.200 --> 0:02:38.600 recently entered into service. There's only about two hundred and 0:02:38.600 --> 0:02:42.800 twenty five flying. The big flyers of them are United 0:02:42.840 --> 0:02:48.000 as you mentioned earlier, Alaska, and then COPA out of Panama, 0:02:48.840 --> 0:02:52.320 and then Aeron Mexico has some of them too. There's 0:02:52.320 --> 0:02:55.560 a bunch of small flyers of them. But Copa is 0:02:55.600 --> 0:02:59.040 another key Boeing customer, right. Copa is an all Boeing 0:02:59.480 --> 0:03:03.200 SEVENTHWTY seventh fleet. They do a great job of helping 0:03:03.240 --> 0:03:05.720 people transit between North and South America. 0:03:05.400 --> 0:03:06.560 Via their hub and Vanama. 0:03:06.960 --> 0:03:10.200 You don't want to take your most important customers off, 0:03:10.600 --> 0:03:12.480 and having quality problems doesn't help that. 0:03:12.960 --> 0:03:13.320 George. 0:03:13.320 --> 0:03:17.040 I'm flying A seven three seven nine hundred from Friday 0:03:17.520 --> 0:03:19.960 from Newark to Aruba, so I want you to take 0:03:20.000 --> 0:03:21.600 care of that for me. Please go check on that 0:03:21.680 --> 0:03:24.480 plane personally, make sure it's all set to go on Friday, because. 0:03:24.520 --> 0:03:27.640 I need that plane to leave here Uba exactly. 0:03:27.680 --> 0:03:32.000 But George, you can't have quality issues in aerospace industry. 0:03:32.120 --> 0:03:34.760 You just can't. It's like a zero tolerance kind of thing. 0:03:35.480 --> 0:03:35.920 Exactly. 0:03:36.360 --> 0:03:37.880 How is this kind of happening here? 0:03:37.920 --> 0:03:42.080 I mean, you know, I mean, I'm just surprised that 0:03:42.200 --> 0:03:45.400 we're having these these types of issues and with this 0:03:45.480 --> 0:03:48.320 kind of you know, kind of it happens, seems more 0:03:48.360 --> 0:03:48.880 than it should. 0:03:49.720 --> 0:03:50.280 Yeah, agreed. 0:03:50.360 --> 0:03:53.440 I think that it's a function of the setup going 0:03:53.520 --> 0:03:56.080 into the pandemic and then. 0:03:56.080 --> 0:03:57.440 And the US labor market, right. 0:03:57.520 --> 0:04:00.520 So, I think we had this MCAS problem with with 0:04:00.600 --> 0:04:04.920 the max they were grounded around the world. If you 0:04:04.960 --> 0:04:07.480 were working at Spiritual Systems are boeing, it was pretty 0:04:07.680 --> 0:04:11.440 depressing times. As you were sort of fixing that problem, 0:04:11.480 --> 0:04:15.040 we went into a pandemic, you know, air travel went 0:04:15.080 --> 0:04:18.920 to zero, almost zero, let's call it. 0:04:19.560 --> 0:04:20.599 And so I think if. 0:04:20.440 --> 0:04:22.800 You were sitting there at spirit Aerosystems working in airplanes, 0:04:22.800 --> 0:04:24.760 you thought this might not be a career. 0:04:24.839 --> 0:04:26.040 That's a long term career. 0:04:26.400 --> 0:04:28.080 So I think they've had a lot of Turnament and 0:04:28.400 --> 0:04:30.680 Bowings had the same and both companies said, look, we've 0:04:30.680 --> 0:04:32.719 got to cut cross. We may need to send some 0:04:32.839 --> 0:04:36.360 senior talent home, you know, give them buyout packages whatever. 0:04:36.760 --> 0:04:38.839 So I think both of these companies have seen a 0:04:38.839 --> 0:04:42.360 lot of turnover in employees, and when you have that, 0:04:42.600 --> 0:04:45.039 you have to train the new ones and it just 0:04:45.080 --> 0:04:47.839 takes a while, right, And so I think both of 0:04:47.839 --> 0:04:49.840 them need to look at their training programs and their 0:04:49.880 --> 0:04:53.080 safety programs and dig deeper on that. I feel like, 0:04:53.720 --> 0:04:55.839 you know, this wasn't something that happened to Airbus, because 0:04:55.839 --> 0:04:59.240 the Airbus didn't go into the pandemic with a problem 0:04:59.320 --> 0:05:01.720 with their primary you know, aircraft, the eight three twenty. 0:05:01.760 --> 0:05:02.720 They're big people. 0:05:02.480 --> 0:05:05.240 Mover, and I think Airbus probably did a better job 0:05:05.279 --> 0:05:09.200 of managing supply chain and the European industry managing supply 0:05:09.279 --> 0:05:11.480 chain challenges during the pandemic, and. 0:05:11.440 --> 0:05:13.560 I think that's why we're here. 0:05:13.839 --> 0:05:16.080 And the US labor market has been really strong, so 0:05:16.320 --> 0:05:17.839 you go on finding on the job pretty easy. 0:05:17.960 --> 0:05:21.360 So going has to get all over this spirit us too. 0:05:21.839 --> 0:05:24.360 George, it's John Tucker. Quick question for you. Will you 0:05:24.480 --> 0:05:28.560 explain what the door plug is? The fuselage comes with 0:05:28.680 --> 0:05:32.400 the ability to put in a door if the configuration 0:05:33.480 --> 0:05:35.280 requires it. How does that work? 0:05:36.160 --> 0:05:38.279 Yes, I mean some of the larger versions of the 0:05:38.279 --> 0:05:41.680 seven thirty seven. Some of the customers can really pack 0:05:41.760 --> 0:05:46.440 them out right. So I think a similar airplane Ryanair 0:05:46.480 --> 0:05:49.000 will get two hundred some people in there. See, you 0:05:49.040 --> 0:05:51.359 need a certain number of exits per number of people 0:05:51.400 --> 0:05:53.760 in the airplane. So if you're maxing it out like 0:05:53.839 --> 0:05:56.760 Ryan Air, you have it. You have an exit door there. 0:05:57.200 --> 0:05:59.720 If you're not maxing it out like Alaska, you know 0:06:00.080 --> 0:06:01.680 the exit door and you put a panel there. 0:06:01.960 --> 0:06:03.360 You don't want to lose any of the space of 0:06:03.440 --> 0:06:04.000 the exit door. 0:06:04.080 --> 0:06:08.080 And the panel of what that's just bolted in, hopefully 0:06:08.080 --> 0:06:08.720 bolted in. 0:06:09.440 --> 0:06:13.000 My understanding, has got four bolts and some other connections 0:06:13.040 --> 0:06:16.440 to keep it attached to the fuselage. So again, as 0:06:16.440 --> 0:06:18.120 it goes down the line, someone probably st to go 0:06:18.200 --> 0:06:21.600 out and make sure that that the panel gets inserted correctly. 0:06:21.640 --> 0:06:24.200 If it's not an airplane that needs that exit door, 0:06:24.920 --> 0:06:27.159 we think that's probably where the problem was is in 0:06:27.200 --> 0:06:28.120 attention to detailing. 0:06:28.400 --> 0:06:30.440 You look at it, you look at the video from 0:06:30.680 --> 0:06:35.440 NTSB and whatever. There's no fracturing, there's no tearing whatsoever 0:06:35.520 --> 0:06:36.800 of the skin of the aircraft. 0:06:38.040 --> 0:06:40.920 Agreed the silver Liner. The silver lining to the story 0:06:41.160 --> 0:06:44.520 is that it does not look like any structural problem. 0:06:44.600 --> 0:06:46.720 Like you said, it looks like a pretty clean breakaway, 0:06:47.600 --> 0:06:50.119 and that indicates to us that it was just either 0:06:50.360 --> 0:06:52.760 the fasteners were faulty, and I think we would have 0:06:52.800 --> 0:06:55.560 seen that in other airplanes by now. I think the 0:06:55.640 --> 0:06:58.400 FA will know that shortly as they do with their inspections, 0:06:58.880 --> 0:07:00.479 or someone didn't fascinate correctly. 0:07:01.040 --> 0:07:04.440 How does that end up more broadly affecting other airliners 0:07:04.440 --> 0:07:06.720 like United, for instance, has the most max nines in 0:07:06.800 --> 0:07:10.200 service around seventy nine. How does that impact United in 0:07:10.240 --> 0:07:12.160 particularly as well. 0:07:12.280 --> 0:07:14.480 Yeah, so the inspection program, I guess is that all 0:07:14.520 --> 0:07:17.440 these will have to be inspected, all these airplanes, and 0:07:17.480 --> 0:07:19.120 so their inspection process is going to take up a 0:07:19.160 --> 0:07:21.200 little bit longer than these are going to take more 0:07:21.280 --> 0:07:24.720 airplanes out of service, hopefully not the you know, North 0:07:24.760 --> 0:07:27.040 to Aruba flights, but we'll see what happens, you know, 0:07:27.600 --> 0:07:29.520 if they need people to fly as I get them. 0:07:29.680 --> 0:07:34.640 There's and so I think another silver lining here is 0:07:34.680 --> 0:07:38.120 that it is the first quarter traditionally a low time 0:07:38.160 --> 0:07:42.840 for travel, and so I think it's less impactful for 0:07:42.920 --> 0:07:45.040 the airlines coming right now. 0:07:45.240 --> 0:07:47.120 But it's going to take United some time. So they're 0:07:47.120 --> 0:07:48.640 going to have to knock down some of the schedule. 0:07:48.680 --> 0:07:51.640 Probably while they get wait for these inspections and wait 0:07:51.680 --> 0:07:54.280 for gudents from the FAA, is what's going to be 0:07:54.280 --> 0:07:55.560 at all clear for the airplane. 0:07:55.680 --> 0:07:58.120 So I know, George, just from reading your research and 0:07:58.160 --> 0:08:01.840 talking to you, that Boeing and Airbus they can't build 0:08:01.840 --> 0:08:04.240 planes fast enough. There's so much demand out there these days. 0:08:04.280 --> 0:08:07.080 So what happens to Boeing's assembly lines today? Are they 0:08:07.120 --> 0:08:10.280 still going full board or are they standing down here? 0:08:10.400 --> 0:08:11.000 What are they doing? 0:08:12.320 --> 0:08:12.560 You know? 0:08:12.760 --> 0:08:15.840 My guess is that they're probably still building today. My 0:08:15.920 --> 0:08:19.520 guess is that, you know, like they said, they're very 0:08:19.560 --> 0:08:21.080 focused in the regulators. They want to see what the 0:08:21.120 --> 0:08:24.600 regulators have to say. They'd probably look closely. 0:08:24.240 --> 0:08:29.280 At this particular station on the line and want to. 0:08:29.200 --> 0:08:31.800 Make sure that it's stable. They could even build seven 0:08:31.920 --> 0:08:35.800 thirty seven eights which don't have this store and wouldn't 0:08:35.840 --> 0:08:38.280 have any limitations at this point. 0:08:38.400 --> 0:08:40.960 So my guess is that their production continues. 0:08:42.160 --> 0:08:44.640 We only have about a minute left, but we are 0:08:44.679 --> 0:08:47.480 approaching earning season. What do you expect as far as 0:08:47.600 --> 0:08:50.520 particularly how this could impact a Boeing when it does 0:08:50.559 --> 0:08:52.680 come out with some of its forward looking guidance. 0:08:54.160 --> 0:08:56.720 Yeah, I mean again, I think if it's an anomaly, 0:08:57.280 --> 0:08:59.720 I would think that Following's guidance on how many airplanes 0:08:59.720 --> 0:09:02.640 they can liver in twenty twenty four would be largely 0:09:02.760 --> 0:09:05.719 unchanged from this. It seems to me like this could 0:09:05.760 --> 0:09:07.640 probably be wrapped up in a couple of weeks. 0:09:08.320 --> 0:09:10.200 Again, you don't like quality problems, but we could probably 0:09:10.200 --> 0:09:11.840 wrapped it in a couple of weeks. Of it's anomaly, 0:09:12.040 --> 0:09:13.120 that's not an anomaly. 0:09:13.240 --> 0:09:16.240 That's when you start knocking down production schedules, knocking down 0:09:16.480 --> 0:09:18.360 expectations for cash flow and profit. 0:09:18.880 --> 0:09:20.760 We don't expect that right now, all. 0:09:20.760 --> 0:09:23.000 Right, George, thanks so much for joining us. George Ferguson. 0:09:23.040 --> 0:09:25.400 He covers all the airspace companies, he covers the airlines 0:09:26.360 --> 0:09:29.440 as well, so top to bottom, he's got his finger 0:09:29.480 --> 0:09:32.280 on the pulse what's happening in that global airspace business. 0:09:32.280 --> 0:09:36.760 And again Boeing shares our down here today as our 0:09:36.800 --> 0:09:38.960 Spirit Airlines as well as one of the suppliers of 0:09:39.000 --> 0:09:39.800 the fusel logs. 0:09:41.320 --> 0:09:44.720 You're listening to the team. Can's a live program Bloomberg 0:09:44.760 --> 0:09:48.160 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:09:48.200 --> 0:09:51.360 the iHeartRadio app, and the Bloomberg business app or listen 0:09:51.440 --> 0:09:53.520 on demand wherever you get your podcasts. 0:09:55.320 --> 0:09:58.439 I want to get straight to our next guest, Paul 0:09:58.520 --> 0:10:01.959 Mark Newton, who is global head of Technical Strategy over 0:10:01.960 --> 0:10:04.800 at Funstrat Global Advisors, and have to point out he's 0:10:04.840 --> 0:10:08.000 been very spot on with his call. So if you 0:10:08.320 --> 0:10:11.800 rewind and think back to the fall of twenty twenty one, 0:10:11.840 --> 0:10:14.360 this was right before the Nazaq one hundred peaked out, 0:10:14.360 --> 0:10:17.599 as well as the Russell two thousand, of course a 0:10:17.640 --> 0:10:19.439 couple months before what happened with the S and P 0:10:19.520 --> 0:10:22.800 five hundred hitting ultimately its record. That was about two 0:10:22.920 --> 0:10:25.280 years ago. But he was already concerned about the trajectory 0:10:25.280 --> 0:10:27.559 of stocks well before a lot of those geopolitical issues 0:10:27.600 --> 0:10:29.160 happened at the beginning of that year, and then also 0:10:29.200 --> 0:10:31.960 had adjusted. He had around a forty seven hundred price 0:10:31.960 --> 0:10:34.439 target for the S and P five hundred, so pretty 0:10:34.440 --> 0:10:36.640 close there we're the S and P five hundred finished 0:10:36.679 --> 0:10:38.720 the year. But Mark, thanks for joining us. It's always 0:10:38.720 --> 0:10:41.040 great speaking with you. I want to get your thoughts 0:10:41.080 --> 0:10:43.840 firstly on what's your outlook for equities this year. 0:10:44.920 --> 0:10:48.680 Thank you, Jess. Happy New year to everybody, and you 0:10:48.720 --> 0:10:51.720 know I am very constructive on equities this year, actually, 0:10:51.800 --> 0:10:53.760 I do believe the S and P will get up 0:10:53.760 --> 0:10:57.840 to fifty one to seventy five. You know, in general, 0:10:57.880 --> 0:10:59.760 it should be a lot easier year for Manny in 0:10:59.760 --> 0:11:03.240 best than last year. And last year was largely you know, 0:11:03.320 --> 0:11:05.560 tech dominated for most of the year in the broader 0:11:05.559 --> 0:11:09.720 market largely it took some time for many other sectors 0:11:09.720 --> 0:11:11.720 to play catch up, and I think we did see 0:11:11.720 --> 0:11:14.600 that in the fourth quarter. My view is that this 0:11:14.760 --> 0:11:18.040 year should allow for a more broad based rally and 0:11:18.160 --> 0:11:23.840 many of these other sectors like financials and healthcare, you know, 0:11:24.040 --> 0:11:26.640 and I think the beginning of the year certainly has 0:11:26.679 --> 0:11:29.440 seen a little bit of a drawdown and some of 0:11:29.440 --> 0:11:32.839 the former leaders for last year certainly a very big 0:11:32.880 --> 0:11:35.640 period of mean reversion. But my bigger call is that 0:11:35.679 --> 0:11:38.000 I think Bonn yields are going to drop this year, 0:11:38.120 --> 0:11:40.360 likely down to three and a quarter percent on the tenure, 0:11:40.840 --> 0:11:45.000 and that markets should have a very good year, and 0:11:45.080 --> 0:11:47.240 that you know, any sort of recession I think is 0:11:47.280 --> 0:11:50.480 going to be postponed at least until twenty twenty five. 0:11:51.480 --> 0:11:53.640 So Mark, you bring up a good point there. 0:11:53.640 --> 0:11:55.800 I mean, when you think about twenty twenty three's performance 0:11:55.880 --> 0:11:59.760 up until kind of October, it was extraordinarily narrow, and 0:11:59.800 --> 0:12:02.640 I know, so for folks that think about the health 0:12:02.720 --> 0:12:05.400 of the market, that's not very healthy because the breath 0:12:05.440 --> 0:12:08.200 of the market advance wasn't great. They got a little 0:12:08.200 --> 0:12:09.599 bit better there in the fourth quarter. How do you 0:12:09.640 --> 0:12:11.720 feel about kind of the breath of that we're seeing 0:12:11.720 --> 0:12:12.640 in the market these days. 0:12:13.880 --> 0:12:17.080 Well, I think the breath recently has been at least 0:12:17.080 --> 0:12:19.000 over the last couple of months, has gotten almost so 0:12:19.160 --> 0:12:22.000 good that it merits, you know, thinking that we probably 0:12:22.040 --> 0:12:25.240 will see some consolidation in the first quarter of this year. 0:12:26.480 --> 0:12:28.080 You know, I don't think we can just continue to 0:12:28.080 --> 0:12:30.200 go straight higher. We have nearly ninety percent of all 0:12:30.240 --> 0:12:32.520 stocks right now above their fifty day moving averages and 0:12:32.840 --> 0:12:35.240 about seventy five percent above their two hundred days. So 0:12:35.679 --> 0:12:37.680 but important to mention that we've seen one of the 0:12:37.760 --> 0:12:40.480 quickest moves from a very low level of breath the 0:12:40.640 --> 0:12:42.840 very high level of breadth in a very short period 0:12:42.840 --> 0:12:46.520 of time. And for me, that's very encouraging towards thinking that, 0:12:46.880 --> 0:12:50.360 you know, we're seeing this broader based recovery in risk 0:12:50.400 --> 0:12:53.760 assets still at a time when a lot of the 0:12:53.760 --> 0:12:59.640 institutional investors are not as enthusiastic about risk assets by 0:13:00.080 --> 0:13:02.280 you know, gauged by cash on the sidelines, or just 0:13:02.320 --> 0:13:04.480 the ongoing wars that we're seeing, and a lot of 0:13:04.480 --> 0:13:09.160 reasons to be concerned, but in general it's a healthy time. 0:13:09.559 --> 0:13:12.880 I just think we probably need some backing and filling with. 0:13:12.920 --> 0:13:16.599 What you're seeing, especially underlying when you're looking at some 0:13:16.800 --> 0:13:19.240 small cop caps that have taken off, especially of the 0:13:19.240 --> 0:13:21.280 past couple of months after getting hit hit hard, not 0:13:21.400 --> 0:13:23.439 just last year, but over the past couple of years. 0:13:23.679 --> 0:13:26.400 And then of course bank stocks which had getten hard 0:13:26.480 --> 0:13:29.280 last spring but had seen obviously a lot of improvement 0:13:29.320 --> 0:13:31.120 over the past two months. Do you think that still 0:13:31.120 --> 0:13:33.280 has legs there? Like what are the technicals telling us 0:13:33.320 --> 0:13:34.840 when it comes to the small caps and some of 0:13:34.840 --> 0:13:36.600 those value corners of the market like banks. 0:13:37.880 --> 0:13:40.559 Yeah, thanks, I do think that small caps have a 0:13:40.559 --> 0:13:43.679 window for outperformances here. A lot of that should be 0:13:43.760 --> 0:13:47.560 predicated on rates pulling back further, which can be helpful 0:13:47.679 --> 0:13:50.720 to this area. As you know, and most investors know. 0:13:50.920 --> 0:13:53.079 You know, the small cap sector has been a very 0:13:53.080 --> 0:13:56.920 difficult spot over the last decade. You know, it's important 0:13:57.040 --> 0:13:58.839 that we saw a brief period in twenty twenty when 0:13:58.840 --> 0:14:01.280 they showed very good outperform, but largely it's been a 0:14:01.360 --> 0:14:04.880 very big time for large cap growth, and I think 0:14:04.920 --> 0:14:07.960 that you know, initially, as we see rates start to 0:14:08.040 --> 0:14:10.480 really accelerate to the downside, that's going to be a 0:14:10.480 --> 0:14:14.040 time when small caps outperform, which is probably a you know, 0:14:14.160 --> 0:14:16.560 six to eight month window. This year, we see some 0:14:16.600 --> 0:14:20.000 decent outperformance financials. You know, that is sort of a 0:14:20.040 --> 0:14:24.680 mixed picture, and I'm not bullish on financials for the year. 0:14:24.880 --> 0:14:27.600 I'm more neutral, but I do think that you know, 0:14:27.720 --> 0:14:30.960 they can work. You know, we've seen the eel curve 0:14:31.240 --> 0:14:33.720 get a lot less inverted, and I think you know, 0:14:33.800 --> 0:14:35.800 through the stress tests we've had over the last decade 0:14:35.800 --> 0:14:38.200 that you know, the bound sheets are in very good shape, 0:14:38.400 --> 0:14:41.680 but you know, still tough for a lot of these 0:14:41.720 --> 0:14:44.000 regional banks. It's going to take some time. We've seen 0:14:44.000 --> 0:14:46.360 a very good move off below's I would argue that's 0:14:46.400 --> 0:14:51.200 probably not the best area for immediate outperformance, but certainly 0:14:51.200 --> 0:14:53.400 i'd be a big buyer on the backing and filling. 0:14:54.120 --> 0:14:57.720 So Mark, the extent of my technical now is the 0:14:57.960 --> 0:14:58.680 rs I phone. 0:14:59.000 --> 0:15:03.400 You know, that's his favorite. I mean Paul's point though, 0:15:03.440 --> 0:15:06.880 with RSI because I know you have your way of 0:15:06.880 --> 0:15:09.800 looking at technicals, but a lot of traders it's not 0:15:09.880 --> 0:15:11.680 just a one day when they're looking at charts. They 0:15:11.680 --> 0:15:13.600 look at weekly, they look at monthly. I think a 0:15:13.640 --> 0:15:15.920 lot of people, especially coming into this year, to Paul's point, 0:15:16.080 --> 0:15:18.320 they kept talking about, hey, these overbought levels, But a 0:15:18.320 --> 0:15:20.800 lot of times when I'm speaking with technicians, they're viewing 0:15:20.840 --> 0:15:22.920 it from other lenses as well. So even though you 0:15:22.920 --> 0:15:25.200 could see RSI, even though it's not still above seventy 0:15:25.200 --> 0:15:26.600 at this point, but if you're looking at the S 0:15:26.640 --> 0:15:28.600 and P or the NAZAG one hundred, you could stay 0:15:28.640 --> 0:15:31.280 above seventy four a while, and that doesn't necessarily mean 0:15:31.320 --> 0:15:33.680 it's a bad thing, right, Yeah. 0:15:33.440 --> 0:15:37.520 That's a very important comment, and I think it's really 0:15:37.680 --> 0:15:41.640 key to really measure investors time frame of investment, their 0:15:41.680 --> 0:15:44.760 risk tolerance, and generally looking you know, you'll hear traders 0:15:44.760 --> 0:15:47.160 say well, it's oversold, it's overbought, But a lot of 0:15:47.160 --> 0:15:50.320 times they're mentioning very very short term time frames. And 0:15:50.360 --> 0:15:53.200 if you look at the larger periods where equities have 0:15:53.240 --> 0:15:55.840 peaked or bottom, that's come when you know weekly or 0:15:55.920 --> 0:15:59.440 monthly RSI have gotten very overbought or oversold, and right 0:15:59.480 --> 0:16:02.120 now we're sort of in a pocket where momentum has 0:16:02.160 --> 0:16:05.520 been very positive. But yet you know, the recent drawdown 0:16:05.560 --> 0:16:08.440 we've had in recent weeks has actually cause r SI 0:16:08.880 --> 0:16:12.240 to pull back from those overbolt levels on a daily 0:16:12.280 --> 0:16:15.400 and actually a weekly basis, so and I'm a little 0:16:15.400 --> 0:16:18.200 more encouraged, you know, I think for the year, just 0:16:18.240 --> 0:16:22.280 because I don't view momentum as being all that overbought 0:16:22.400 --> 0:16:26.760 per RSI. But the divergences are really the most important, 0:16:27.000 --> 0:16:29.680 you know, way to use technical analysis in my view, 0:16:29.680 --> 0:16:32.400 and use momentum. It's not that when things get to 0:16:32.480 --> 0:16:35.600 overbought you want to sell, uh, it's really when you 0:16:35.640 --> 0:16:38.720 see repeated stabs at new highs and prices where momentum 0:16:38.720 --> 0:16:41.800 does not follow and starts to move down, and that 0:16:41.800 --> 0:16:44.880 can be sometimes a warning sign. And really in both 0:16:44.920 --> 0:16:47.880 directions price moves lower, you want to watch for weekly 0:16:48.000 --> 0:16:50.320 or monthly r s I to hold and not make 0:16:50.400 --> 0:16:53.840 new lows. These divergences are really sort of the bread 0:16:53.840 --> 0:16:59.160 and butter of how many technical analysts really use you know, 0:16:59.320 --> 0:17:00.400 r s I. 0:17:00.480 --> 0:17:04.639 How about volume? What's the volume been telling? You know 0:17:04.640 --> 0:17:07.320 in the equity markets and the bond markets recently. 0:17:08.440 --> 0:17:13.040 Well, volume certainly is very important. You know, I would 0:17:13.119 --> 0:17:15.640 view more so on a single stock basis than how 0:17:15.680 --> 0:17:17.720 I look at the markets. There's just a lot of 0:17:17.760 --> 0:17:20.960 ways to measure volume, and particularly all the different you know, 0:17:20.960 --> 0:17:23.480 we've heard about these record inflows and that would seem 0:17:23.520 --> 0:17:25.399 to be a very positive thing, but yet markets have 0:17:25.440 --> 0:17:29.119 been selling off, so volume is probably you know, not 0:17:29.320 --> 0:17:33.920 as helpful for day to day decisions on for investors 0:17:34.000 --> 0:17:37.040 when looking at the broader indsees, but certainly you want 0:17:37.040 --> 0:17:40.679 to see breakouts of stocks happen on good volume and 0:17:41.119 --> 0:17:43.760 you know, pullbacks happening on lesser volume. Those can all 0:17:43.800 --> 0:17:46.280 be very important things to concentrate on. 0:17:46.520 --> 0:17:48.520 I know something too, when it comes to volume can 0:17:48.520 --> 0:17:50.600 be tricky if you're looking at the ARMS index or 0:17:50.720 --> 0:17:53.720 some people when they follow technicals trend. I know it 0:17:53.840 --> 0:17:58.919 spiked above three five actually on December twentieth, but that 0:17:58.960 --> 0:18:00.879 can be a little tricky when you're looking at something 0:18:00.920 --> 0:18:02.360 like that. Is it more just a day to day 0:18:02.359 --> 0:18:04.320 thing that it's more useful than maybe. 0:18:04.119 --> 0:18:07.960 More fun funding. Yeah, that's a great point because the 0:18:08.040 --> 0:18:11.399 trend is very useful and we won't need to go 0:18:11.480 --> 0:18:13.200 into a lot of depth here, but a lot of 0:18:13.240 --> 0:18:16.840 it's about the advances to decliners divided by the advancing 0:18:16.920 --> 0:18:20.400 volume minus declining volume. In general, when you have very 0:18:21.119 --> 0:18:26.359 high volume on the downside, oftentimes that can signal inflection points, 0:18:26.400 --> 0:18:29.320 particularly after a lengthy decline. If all of a sudden 0:18:29.359 --> 0:18:32.560 you see people rushing in to sell and the declining 0:18:32.680 --> 0:18:37.119 volume is very very heavy, that can be important marking bottoms. 0:18:37.640 --> 0:18:41.080 But I would argue precisely the opposite is also true. 0:18:41.119 --> 0:18:45.600 If you have a high trin after an advancing period 0:18:45.640 --> 0:18:48.080 in stocks, we're a huge rally and then a very 0:18:48.160 --> 0:18:51.480 high trin on a reversal. For me, that oftentimes is 0:18:51.480 --> 0:18:54.879 a warning sign. But statistically, look, whenever you look at 0:18:54.920 --> 0:18:56.680 these things going out three months, six month and try 0:18:56.720 --> 0:18:58.200 to measure them, they all say that the market is 0:18:58.240 --> 0:19:00.639 going to go higher, and that's just the upward trending 0:19:00.720 --> 0:19:02.720 nature of the market. So it's more for me on 0:19:02.840 --> 0:19:06.680 a short term basis and just looking at that trin 0:19:07.280 --> 0:19:10.040 when you see, you know, trin readings being above two 0:19:10.040 --> 0:19:13.760 point five, that can be very important literally in both directions. 0:19:14.200 --> 0:19:16.359 All right, Very good, Mark Newton, thanks so much for 0:19:16.400 --> 0:19:19.120 journey us really appreciate it. Mark Newton, he's global head 0:19:19.119 --> 0:19:22.439 of technical strategy, fun Strike Global Advisors, Tom Lee and 0:19:22.440 --> 0:19:24.040 some guys. Are they get some smart people over there? 0:19:24.040 --> 0:19:26.600 Oh yeah, No, they're bringing in a lot of smart talent. 0:19:26.720 --> 0:19:26.960 Yeah. 0:19:27.000 --> 0:19:29.719 Actually, so again, we don't talk technicals as much as 0:19:29.720 --> 0:19:31.120 maybe we should have, but a lot for a lot. 0:19:31.080 --> 0:19:33.439