WEBVTT - A Look Ahead to PCE Data and Nvidia Earnings 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:22.800 the best in economics, finance, investment, and international relations. 0:00:23.040 --> 0:00:25.800 You can also watch the show live on YouTube. 0:00:26.160 --> 0:00:30.120 Visit the Bloomberg Podcast channel on YouTube to see the 0:00:30.200 --> 0:00:33.720 show weekday mornings from seven to ten am Eastern from 0:00:33.760 --> 0:00:37.199 our global headquarters in New York City. Subscribe to the 0:00:37.240 --> 0:00:41.159 podcast on Apple, Spotify, or anywhere else you listen and 0:00:41.320 --> 0:00:45.320 always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg 0:00:45.560 --> 0:00:46.320 Business App. 0:00:46.760 --> 0:00:50.479 Amy with Silverman RBC joins us this morning. 0:00:50.880 --> 0:00:55.639 Amy. What do the derivatives, variantskurtosis, the rest of it? 0:00:56.200 --> 0:00:59.880 What's the character the nature of this pullmarket when you 0:01:00.080 --> 0:01:01.320 look at the cross moments. 0:01:03.080 --> 0:01:05.560 Hey, good morning guys. So you know one thing I've 0:01:05.560 --> 0:01:09.680 been analogizing this too, is right now, the airplane may 0:01:09.760 --> 0:01:13.920 have stabilized, we're at a steady altitude, but everyone still 0:01:13.959 --> 0:01:16.640 remembers the turbulence. We might still have our seatbelt time, 0:01:16.640 --> 0:01:18.960 we probably have our eyes closed. And that's a little 0:01:18.959 --> 0:01:21.520 bit the positioning we're seeing in the directors market. So 0:01:21.680 --> 0:01:24.560 you know your headline Vixen is normalized a lot, but 0:01:24.640 --> 0:01:27.440 all those secondary moments that you talk about, your skew, 0:01:27.560 --> 0:01:30.600 your volatility of ball, you know, those are still pretty high. 0:01:30.680 --> 0:01:33.559 And for good reason. You know, institutional memory is short, 0:01:33.600 --> 0:01:35.520 and we still remember what happened a few weeks ago. 0:01:36.000 --> 0:01:39.640 Are we under owned Tech into Nvidia? Folks ed Ludlow 0:01:39.680 --> 0:01:43.360 a special tomorrow in the six o'clock evening hour with 0:01:43.520 --> 0:01:47.880 mister rying from in Vidia, Amy was Silberman. Are we 0:01:47.960 --> 0:01:50.400 under owned on tech? Or is Tech over owned? 0:01:52.040 --> 0:01:54.600 Look from a positioning perspective, it feels like a lot 0:01:54.600 --> 0:01:57.440 of people have already jumped in the pool. The reason 0:01:57.480 --> 0:01:59.920 I say that is when you look at historical position 0:02:00.200 --> 0:02:03.120 and every earnings except this one for Nvidia, you know, 0:02:03.200 --> 0:02:06.120 it was very very long that call SKU. People really 0:02:06.160 --> 0:02:08.440 need to jump in, so they're holding that right tail 0:02:08.480 --> 0:02:11.000 in the options market to do so. You don't see 0:02:11.000 --> 0:02:13.480 that this time around. It's much more even. So. You know, 0:02:13.520 --> 0:02:16.600 people aren't overly bearish, but they're also not overly bullish. 0:02:16.720 --> 0:02:19.440 And to me, that not being overly bullish is very 0:02:19.520 --> 0:02:22.480 very different than that past I'd say six to eight quarters. 0:02:22.680 --> 0:02:24.480 You know, ever since we got that May twenty twenty 0:02:24.480 --> 0:02:25.360 three blowout number. 0:02:25.520 --> 0:02:28.320 Damian Goldwin Sachs making a huge deal about this. A 0:02:28.320 --> 0:02:30.200 lot of the you know, I don't know I'm gonna say, 0:02:30.280 --> 0:02:32.840 is a generalization. Hedge funds yeap are not They're not 0:02:33.000 --> 0:02:34.640 piled into in video right now. 0:02:34.720 --> 0:02:36.400 Well, you know what I mean, Tom and Amy. You 0:02:36.400 --> 0:02:37.679 can help me with this. You know, I'm not really 0:02:37.680 --> 0:02:40.040 so concerned whether or not the skew on Nvidia is 0:02:40.120 --> 0:02:42.760 platty or leptocritotic. What I'm really more concerned with is 0:02:42.800 --> 0:02:45.520 real demand for hedging. It's taken me, I mean for months, 0:02:45.560 --> 0:02:49.600 for months, I've been talking to people about costs for protections, cheap, 0:02:49.639 --> 0:02:51.360 you should be hedging here. You know, equity market at 0:02:51.360 --> 0:02:53.320 all time highs. Nobody would take my call. Nobody would 0:02:53.360 --> 0:02:55.560 talk to me. What are you hearing now from investors? 0:02:56.760 --> 0:03:00.920 Yeah, welcome to my life. You're exactly right. You know, 0:03:01.000 --> 0:03:03.079 people don't want to hear about it when realized, well 0:03:03.120 --> 0:03:05.600 it is hitting eight and VIX is kind of just 0:03:05.600 --> 0:03:08.280 floating along. But it usually takes some sort of draw 0:03:08.320 --> 0:03:11.560 down in the market to remind people why you hedge 0:03:11.600 --> 0:03:13.639 in the first place. I will tell you those calls 0:03:13.680 --> 0:03:16.560 are picking up, and I will tell you that the 0:03:16.600 --> 0:03:20.080 cost protection on a historical basis is still relatively inexpensive. Sure, 0:03:20.120 --> 0:03:22.720 is it more expensive than it was three weeks so absolutely, 0:03:23.040 --> 0:03:25.120 but on a kind of longer tail basis, you know, 0:03:25.160 --> 0:03:28.519 it's still relatively attractive and you can structure ways to carry. 0:03:28.200 --> 0:03:30.919 That cost across the nation and worldwide. 0:03:31.240 --> 0:03:34.800 Just to help you out with a jargon of young sessour, 0:03:35.640 --> 0:03:39.680 his golf game right now is Lepto kutah, So that's 0:03:39.720 --> 0:03:40.840 where he got that phrase. 0:03:40.840 --> 0:03:41.520 Trump jam. 0:03:42.040 --> 0:03:43.360 We got to ask you about this. 0:03:43.440 --> 0:03:46.000 I know that in Vidia earnings it's a big the 0:03:46.080 --> 0:03:48.080 more option markets are pricing in a big move here, 0:03:48.160 --> 0:03:50.520 you know what other events over the next let's say 0:03:50.560 --> 0:03:53.000 thirty days are really pricing in big moves if you 0:03:53.040 --> 0:03:55.840 look at overnight option markets. Obviously you have NFP on 0:03:55.880 --> 0:03:57.840 the sixth of September, but you know after that, I 0:03:57.840 --> 0:03:59.760 mean we've got some FED meetings, We've got CPI, I 0:03:59.800 --> 0:04:02.400 mean what about BOJ, what about boee c B. Do 0:04:02.440 --> 0:04:04.160 you see any other central banks moving markets? 0:04:05.680 --> 0:04:08.280 Not nearly as much as you know that NFP you mentioned, 0:04:08.320 --> 0:04:11.000 and obviously the FED, I will tell you September tends 0:04:11.040 --> 0:04:14.120 to be a conference season, so you know, everyone's kind 0:04:14.120 --> 0:04:16.000 of back into the office. There's a lot of single 0:04:16.080 --> 0:04:19.280 name conferences that come up in industry conferences, and that 0:04:19.400 --> 0:04:22.560 usually tends to kind of surprise people. So you get 0:04:22.600 --> 0:04:25.800 some sort of fundamental idiosyncratic information that comes out of those. 0:04:26.080 --> 0:04:28.719 Those are usually kind of underpriced, and those are some 0:04:28.800 --> 0:04:30.159 things we watch for in September. 0:04:30.240 --> 0:04:33.360 Amy, is there any science here that cash is moving? 0:04:33.480 --> 0:04:35.200 I mean, rates have come in a little bit off 0:04:35.200 --> 0:04:39.560 the power speech, But does RBC see cash moving to 0:04:39.640 --> 0:04:40.440 new places? 0:04:42.040 --> 0:04:44.039 So you know, in some ways, Tom, it's still the 0:04:44.080 --> 0:04:46.039 same old story, but I think there's going to be 0:04:46.120 --> 0:04:49.000 new themes. Obviously, one is just what we're doing and 0:04:49.040 --> 0:04:52.960 seeing in terms of small MidCap value versus growth. You know, 0:04:53.000 --> 0:04:55.320 you get that flight to safety back to the megacap 0:04:55.360 --> 0:04:57.920 tech names when you have those drawdowns. But one thing 0:04:57.960 --> 0:05:00.240 that I think investors have been itching to do, we 0:05:00.279 --> 0:05:02.440 just haven't quite got there, is to go back into 0:05:02.480 --> 0:05:05.160 these wider breadth names. And when you see that call 0:05:05.240 --> 0:05:08.039 Skew pickup, it's usually a forward indicator that those kind 0:05:08.040 --> 0:05:09.320 of themes are starting to move again. 0:05:10.040 --> 0:05:11.760 You know, I just want to ask you one last question, Amy, 0:05:11.800 --> 0:05:14.160 I mean, it's gotten increasingly difficult for hedge funds or 0:05:14.200 --> 0:05:16.839 you know, anybody who's greater on a marked and market basis, 0:05:16.839 --> 0:05:18.600 you know, to find a free lunch in this market. 0:05:18.640 --> 0:05:19.880 You know, it used to be the basis trade. Then 0:05:19.880 --> 0:05:21.760 it was the FX carry trade. Talk to us about 0:05:21.760 --> 0:05:24.960 the impact of US rest of world rate compression. Do 0:05:25.000 --> 0:05:26.360 you see that impacting equities here? 0:05:28.120 --> 0:05:29.560 Yeah, it to some of the great it has a 0:05:29.560 --> 0:05:32.160 little bit already. But I think you know what's interesting 0:05:32.240 --> 0:05:34.360 to me is when you got that major draw down 0:05:34.400 --> 0:05:37.159 a few weeks ago, it really shook all these carry 0:05:37.160 --> 0:05:39.760 trades a little, right, But in our space and equity 0:05:39.839 --> 0:05:42.520 volatility space, we actually saw some folks double down. So 0:05:42.560 --> 0:05:45.040 when you ask about a free lunch, people are still 0:05:45.120 --> 0:05:48.080 betting on that to some degree. I think that's absolutely fascinating. 0:05:48.120 --> 0:05:49.960 You know, So maybe that doesn't work as much in 0:05:50.120 --> 0:05:52.760 FX anymore, but you still people kind of you know, 0:05:52.800 --> 0:05:54.760 they're still saying, like, we think that exists in the 0:05:54.760 --> 0:05:57.120 equity wall premium space, and we're still going to try 0:05:57.160 --> 0:05:58.479 it for the months to come. 0:05:58.680 --> 0:06:12.400 Amy, We're silverman, Thank you so much. RBC Capital. Now 0:06:12.400 --> 0:06:16.400 an in Nvidia actually not a pontificator, but somebody that 0:06:16.520 --> 0:06:20.360 actually knows what they're talking about. Walmart at the bottom 0:06:20.440 --> 0:06:24.200 of the income statement makes three cents on the dollar. 0:06:25.200 --> 0:06:29.320 In Nvidia, at the bottom of the income statement, makes 0:06:29.440 --> 0:06:32.120 fifty five cents on the dollar. 0:06:32.800 --> 0:06:35.799 Can they sustain fifty five. 0:06:35.680 --> 0:06:39.800 Cents on the dollar at the bottom of the income statement. 0:06:40.480 --> 0:06:44.080 I think they can, at least for the next two years. 0:06:44.200 --> 0:06:48.040 It's very hard to look at the landscape beyond that, 0:06:48.120 --> 0:06:51.680 given how fast this space is moving, but clearly they 0:06:51.680 --> 0:06:53.320 have the product lead to do that. 0:06:53.720 --> 0:06:56.720 Men dig sing with us from Bloomberg Intelligence. So just 0:06:56.839 --> 0:07:02.160 simply these chips, these things they sew that we don't understand. 0:07:02.880 --> 0:07:07.920 Do they depreciate, do they become obsolescent? What's the Nvidia 0:07:08.120 --> 0:07:12.040 advantage to what happens to these chips once they sell them? 0:07:12.480 --> 0:07:16.160 They do depreciate, and think of you know, your old PCs. 0:07:16.360 --> 0:07:19.800 I mean, they're still around. They're not as useful as 0:07:19.960 --> 0:07:22.480 the new ones, but you can still use them for 0:07:22.560 --> 0:07:25.920 some sort of computation. It's the same way with nvideo GPUs, 0:07:26.000 --> 0:07:30.360 albeit they're much larger in terms of you know, the 0:07:30.400 --> 0:07:33.680 compute capacity they are sitting in a data center, and 0:07:34.080 --> 0:07:37.640 they do depreciate, but the usefulness will last for at least, 0:07:37.640 --> 0:07:39.920 you know, good eight to ten years. And that's where 0:07:40.000 --> 0:07:44.040 you know, companies that are pulling together all these joint 0:07:44.120 --> 0:07:48.320 data centers with clusters of GPUs, they have an advantage 0:07:48.360 --> 0:07:52.600 because large angline models are all about scaling. The next 0:07:52.640 --> 0:07:55.320 model is going to be ten times bigger GPT five. 0:07:55.800 --> 0:07:59.600 Same thing with lamafoor. And you need more compute capacity 0:07:59.720 --> 0:08:02.679 and the only company that can provide it right now 0:08:02.800 --> 0:08:06.600 is in Vidia. The Intel CPUs or the AMD gear 0:08:06.840 --> 0:08:09.160 just doesn't work when it comes to doing this in 0:08:09.600 --> 0:08:10.480 parallel computing. 0:08:10.800 --> 0:08:14.720 Man, the revenue growth margin EPs, which data points can 0:08:14.800 --> 0:08:17.640 be most watched by the markets as in video releases, 0:08:17.680 --> 0:08:19.560 And you know when I look at it, actually I 0:08:19.600 --> 0:08:21.200 look at margins, I look at the H twenty, I 0:08:21.240 --> 0:08:24.240 look at the Chin specific AI accelerator Nvidia, you know, 0:08:24.280 --> 0:08:25.760 and I know a lot of people are focused on that. 0:08:25.760 --> 0:08:27.920 They're focused on black Well shipments, whatever that is. 0:08:28.120 --> 0:08:30.360 Talk to us about you know what the smart analysts 0:08:30.360 --> 0:08:33.280 on the street are looking for tonight when in VideA releases. 0:08:33.200 --> 0:08:36.440 I would say more revenue and gross margin, and in 0:08:36.480 --> 0:08:40.120 that order simply because right now they are undershipping demand. 0:08:40.800 --> 0:08:44.720 I mean Nvidia has and it's by a lot. That's 0:08:44.760 --> 0:08:47.240 why you see it in their pricing. That's why gross 0:08:47.280 --> 0:08:50.240 margins are going up. But we haven't reached that point 0:08:50.280 --> 0:08:54.000 where the market supply has caught up with the demand. 0:08:54.120 --> 0:08:56.200 And it'll be the case tonight as well. 0:08:56.280 --> 0:09:00.000 And loadload tomorrow night a special one hour Bloomberg Technology 0:09:00.240 --> 0:09:04.200 on this juggernaut. What is your Man Deep Singh question 0:09:04.559 --> 0:09:05.240 to Jensen? 0:09:06.040 --> 0:09:09.320 Well, so I want to hear from Jensen how he 0:09:09.480 --> 0:09:12.960 looks at the scaling laws for these large language models. 0:09:13.400 --> 0:09:16.520 I mean, in the end, this wave is going to 0:09:16.600 --> 0:09:19.520 have some sort of a CAPEX digestion, even though it's 0:09:19.520 --> 0:09:22.439 a long tail when it comes to this capex investments 0:09:22.480 --> 0:09:25.320 that will see with Generator AI there will be a 0:09:25.400 --> 0:09:28.240 digestion phase. So what I want to know from Jensen 0:09:28.360 --> 0:09:30.880 is what is he seeing in terms of scaling of 0:09:30.920 --> 0:09:33.920 these large language models and when will we see a 0:09:34.000 --> 0:09:37.760 pause in terms of evaluating the ROI on the investments 0:09:37.760 --> 0:09:38.760 that companies are making. 0:09:39.000 --> 0:09:43.320 Remind me where the money is in AI. I went 0:09:43.400 --> 0:09:46.440 out on Twitter. They have this grac thing and I 0:09:46.559 --> 0:09:50.720 searched my name and it was hilarious. What came up? 0:09:51.240 --> 0:09:54.920 What is the actual use of AI that Man Deep 0:09:54.920 --> 0:09:55.640 Singh sees. 0:09:55.800 --> 0:09:58.640 I mean right now, if you talk to a developer, 0:09:59.120 --> 0:10:03.320 they would rave about how much productivity jen Ai has 0:10:03.440 --> 0:10:07.000 added to their workflow. And it's just doing simple things, 0:10:07.080 --> 0:10:10.800 you know, simple searches that people were doing on Google 0:10:10.840 --> 0:10:16.120 before the cop pilot brings it inside whatever editor that 0:10:16.120 --> 0:10:19.680 they are working. So it's more about an assistant that 0:10:19.800 --> 0:10:23.080 can do simple task like for an analyst, it's like 0:10:23.160 --> 0:10:27.720 having an associate who can do basic searches, basic data gathering, 0:10:28.040 --> 0:10:30.920 and that's quite powerful because it saves you so much time. 0:10:30.960 --> 0:10:35.040 So we're not talking about high end you know, competition 0:10:35.280 --> 0:10:38.280 that will change the world. Now, it's about doing simple 0:10:38.440 --> 0:10:40.920 tasks in a way where it drives more productivity. And 0:10:40.960 --> 0:10:42.800 we are seeing a lot of instances of that. 0:10:43.320 --> 0:10:45.920 Man deep since August the seventh, when in video stock 0:10:46.000 --> 0:10:47.839 kind of you know, found its base there, the market 0:10:47.840 --> 0:10:50.120 cap is two point four trillion today, just a few 0:10:50.120 --> 0:10:53.040 weeks later it's three point one trillion dollars. That's a 0:10:53.040 --> 0:10:55.680 seven hundred and fifty billion dollar gain in terms of 0:10:55.720 --> 0:10:58.480 market cap. I mean, it's hard to wrap your head 0:10:58.559 --> 0:11:01.720 around a number like that. I mean when the market 0:11:01.720 --> 0:11:03.360 came off, when a video stock came off, that a 0:11:03.400 --> 0:11:05.280 lot of people lose money. Do they have short term 0:11:05.320 --> 0:11:07.480 memory loss? I mean, like, how can it snap back 0:11:07.520 --> 0:11:09.560 so quickly? I mean seven hundred and fifty billion, that's 0:11:09.600 --> 0:11:12.079 mega millions on steroids, Tom, I mean, how do you 0:11:12.160 --> 0:11:12.839 quantify that? 0:11:12.840 --> 0:11:15.080 That just goes to show what kind of an investor 0:11:15.120 --> 0:11:18.120 base they have. Yeah, and if I was Jensen, these 0:11:18.160 --> 0:11:20.439 are not the kind of investors I want to have 0:11:20.520 --> 0:11:24.520 because I want, you know, investors who will be part 0:11:24.559 --> 0:11:26.760 of the long term story. And we know the long 0:11:26.840 --> 0:11:30.040 term story is quite strong when it comes to Nvidia 0:11:30.160 --> 0:11:32.520 and generate a AI. But clearly there are people who 0:11:32.559 --> 0:11:35.000 are trading the stock and that's where you see a 0:11:35.000 --> 0:11:36.720 forty percent round trip for no reason. 0:11:37.520 --> 0:11:40.640 Do they have any Apple characteristics of use of cash, 0:11:40.920 --> 0:11:44.880 of perchance dividend growth, or even with all that cash 0:11:44.920 --> 0:11:48.040 coming in fifty five cents in the dollar, share buyback. 0:11:49.240 --> 0:11:51.920 Probably a buyback could happen, but they just did a 0:11:51.960 --> 0:11:55.480 stock split, so you know, I find it hard to 0:11:55.559 --> 0:11:58.560 believe that they will be buying back their stock at 0:11:58.600 --> 0:12:02.400 this phase when they are growing, you know, forty fifty percent. 0:12:02.679 --> 0:12:06.000 The growth rates will taper in the second half next year, 0:12:06.520 --> 0:12:09.960 but clearly a high growth company like Nvidia, they have 0:12:10.040 --> 0:12:12.080 so much room to invest, they'll probably be looking for 0:12:12.120 --> 0:12:12.959 some acquisitions. 0:12:13.080 --> 0:12:16.520 September nine, Apple out the new toy. Your opinion of 0:12:16.679 --> 0:12:19.360 the Act of September nine. 0:12:19.840 --> 0:12:23.960 I mean it's huge because when we talk about deploying 0:12:24.000 --> 0:12:28.080 generative AI, the number one real estate is your phone, 0:12:28.400 --> 0:12:32.120 and Apple just has to capitalize on doing that. They 0:12:32.120 --> 0:12:34.840 don't have their own large angreg model, but they own 0:12:34.920 --> 0:12:37.800 the distribution when it comes to, you know, the smartphone 0:12:37.840 --> 0:12:41.040 base that they have, and that's where you know, deploying 0:12:41.440 --> 0:12:44.319 Jenai on phone is a lot more powerful than deploying 0:12:44.360 --> 0:12:46.840 Jenai on the cloud. And I think Apple can show 0:12:46.840 --> 0:12:47.600 that on September. 0:12:48.480 --> 0:12:50.040 Man, deep, where are we in the semi cycle? 0:12:50.120 --> 0:12:51.840 I mean seriously, I mean like we saw a lot 0:12:51.880 --> 0:12:55.400 of stockpiling or semiconductor chips after COVID, after the pandemic 0:12:55.440 --> 0:12:57.400 you know by China, and you know the sanctions obviously 0:12:57.480 --> 0:12:59.640 due to the trade war, so a lot of noise there. 0:12:59.720 --> 0:13:01.880 I'm here is where you believe we are in the 0:13:01.920 --> 0:13:02.880 semiconductor cycle. 0:13:02.960 --> 0:13:05.320 I mean I pay a lot of attention to the 0:13:05.400 --> 0:13:09.559 lead times. When the lead times start to compress in semiconductors, 0:13:09.640 --> 0:13:12.280 that's when you know you're a closer to an end 0:13:12.559 --> 0:13:15.480 right now. The lead times aren't compressing. Even though TSMC 0:13:15.600 --> 0:13:18.800 is expanding capacity, the lead times are still growing. In fact, 0:13:18.800 --> 0:13:21.240 there are delays off, you know, producing black leaves, so 0:13:21.520 --> 0:13:23.040 we don't have that insight yet. 0:13:23.240 --> 0:13:25.880 Brilliant Mandy, thank you so much. Bendy's singing, they're an 0:13:25.920 --> 0:13:35.480 in video. 0:13:37.760 --> 0:13:37.800 Ed. 0:13:37.840 --> 0:13:40.800 Your Denny joins us, your DNNY research ed. You have 0:13:40.840 --> 0:13:44.760 a lonely call if you go out not eighteen months, 0:13:44.800 --> 0:13:49.480 but seventeen months, sixteen months, who's counting? You have an 0:13:49.520 --> 0:13:55.600 interpolated extrapolation of the SPX to Dow fifty thousand, one 0:13:55.720 --> 0:13:59.200 hundred and six, which is up twenty one point five 0:13:59.280 --> 0:14:01.720 percent out sixteen months. 0:14:02.000 --> 0:14:03.680 How lonely do you feel? 0:14:03.840 --> 0:14:07.840 How lonely is your bullishness on a in our stock market? 0:14:07.880 --> 0:14:11.000 Certainly more people that are optimistic about the outlook for 0:14:11.120 --> 0:14:14.280 the economy there there were back in twenty twenty two, 0:14:14.400 --> 0:14:18.440 In early twenty twenty two and through twenty twenty three, 0:14:18.520 --> 0:14:21.520 we work pretty lonely with the idea that there wouldn't 0:14:21.560 --> 0:14:25.960 be a recession. And that was definitely a contrary call because, look, 0:14:26.080 --> 0:14:28.520 it was logical to expect that with the FED raising 0:14:28.880 --> 0:14:31.400 interest rates from a FED funds rate of zero to 0:14:31.520 --> 0:14:34.640 five andred quarter percent, that that kind of tightening would 0:14:34.640 --> 0:14:38.680 cause a recession. We argued that we were in enrolling 0:14:38.720 --> 0:14:42.239 recessions that were impacting the various sectors of the economy 0:14:42.600 --> 0:14:45.080 without taking us down. And we argued that the consumer 0:14:45.320 --> 0:14:48.800 was fundamentally resilient, that this idea that they'd run out 0:14:48.800 --> 0:14:53.000 of excess savings missed the point that there were what 0:14:53.240 --> 0:14:57.120 seventy million baby boomers with seventy five trillion dollars of 0:14:57.160 --> 0:14:59.200 retirement assets and the retiring. 0:14:59.280 --> 0:15:00.920 I mean I got up one hundred and twenty eight 0:15:00.960 --> 0:15:04.320 percent from the pandemic low. Here when we get to 0:15:04.360 --> 0:15:08.080 Dow fifty thousand again, this is off sixty six thousand something. 0:15:08.200 --> 0:15:12.600 Edgar Denny's most optimistic call for twenty twenty six. Tell 0:15:12.640 --> 0:15:17.280 us your confidence in your X axis, the ability to 0:15:17.360 --> 0:15:20.720 have pullbacks like we saw in early August, or just 0:15:20.760 --> 0:15:24.520 the confidence of out six months out, one year out, 0:15:24.560 --> 0:15:25.520 fourteen months. 0:15:26.440 --> 0:15:30.640 Well, I think the market has demonstrated not only that 0:15:30.680 --> 0:15:33.080 it's a bull market, but it's a it's a very 0:15:33.560 --> 0:15:37.760 supercharged bull market. I think what's supercharging that is there's 0:15:37.760 --> 0:15:41.640 still a tremendous amount of liquidity in the financial system. 0:15:41.880 --> 0:15:45.040 You know, the increase in indust rates encouraged a lot 0:15:45.040 --> 0:15:48.040 of people to pile into money market mutual funds. So 0:15:48.080 --> 0:15:50.360 we have a record six trillion dollars in money market 0:15:50.440 --> 0:15:52.480 mutual funds, and two and a half training of that 0:15:53.120 --> 0:15:58.360 is retail, and is the Fed lowers interust rates that money. 0:15:58.720 --> 0:16:02.120 Some of that money will pour into the stock market 0:16:02.160 --> 0:16:05.160 and the into the bond market. So you know, every 0:16:05.160 --> 0:16:06.960 time the market goes down, look at what happened in 0:16:07.160 --> 0:16:10.840 early August. The market had a panic attack and it 0:16:10.840 --> 0:16:13.120 didn't last very long, and we basically did a ben 0:16:13.240 --> 0:16:15.200 you jump, and we just rebounded completely. 0:16:15.480 --> 0:16:18.400 Damien says, if you get an Edgeyard Denny end of 0:16:18.480 --> 0:16:22.640 twenty six call which interpolates over to Dow fifty thousand, 0:16:22.760 --> 0:16:27.360 is there talking point? That's thirteen point four percent per 0:16:27.480 --> 0:16:31.400 year from the pandemic bottom when you were the only 0:16:31.440 --> 0:16:33.560 one I know that wasn't assent in cash. 0:16:33.840 --> 0:16:36.400 Edgar Denny, you wrote the book on central bank balance 0:16:36.440 --> 0:16:38.680 sheet finance. I mean, I've been reading your work on 0:16:38.720 --> 0:16:40.960 this for many, many years. It really has helped me 0:16:41.080 --> 0:16:43.040 kind of be a better analyst myself. You know, I'm 0:16:43.080 --> 0:16:45.960 looking at the combined central bank balance sheets of the FED, 0:16:45.960 --> 0:16:48.440 the ECB, the BOJ, and the PBOC. Right now twenty 0:16:48.520 --> 0:16:50.840 five point seven trillion in assets, well off the high 0:16:50.840 --> 0:16:52.840 of thirty one trillion we saw, you know, back in 0:16:52.880 --> 0:16:56.240 twenty twenty two. At what point does the ship stop? 0:16:56.280 --> 0:16:58.680 I mean, I know these balance sheets are still relatively 0:16:58.760 --> 0:17:00.800 large as a percentage of GDP, But what are your 0:17:00.840 --> 0:17:02.800 thoughts here? I mean, at what point does something snap? 0:17:04.560 --> 0:17:07.080 Well, you know, there's been a lot of talk. I've 0:17:07.119 --> 0:17:09.400 been doing this for over forty years and I can't 0:17:09.440 --> 0:17:11.199 tell you how many times people said this is going 0:17:11.240 --> 0:17:14.720 to end badly. And I don't call people using the 0:17:14.720 --> 0:17:16.919 expression when is it going to snap? But I think 0:17:16.960 --> 0:17:19.640 that's the same thing as when will it end badly? 0:17:19.800 --> 0:17:23.879 And so far, you know, occasionally we've had corrections. Occasionally, 0:17:23.920 --> 0:17:27.240 we've had bear markets. Occasionally we've had recessions. These things 0:17:27.280 --> 0:17:30.480 really don't happen that often, right they and we get 0:17:30.480 --> 0:17:31.000 past them. 0:17:31.520 --> 0:17:31.760 Uh. 0:17:31.800 --> 0:17:33.879 And anybody who was smart enough to get out at 0:17:33.880 --> 0:17:37.720 the top of the stock market probably wasn't smart enough 0:17:37.720 --> 0:17:39.400 to get out to get in at the bottom. I mean, 0:17:39.440 --> 0:17:42.040 it's it's a it's a tricky thing to get the 0:17:42.080 --> 0:17:44.679 tops in the bottoms and I'm sort of in the 0:17:45.600 --> 0:17:49.280 Professor Siegel camp, the Warren Buffett camp that says, uh, 0:17:49.600 --> 0:17:52.600 you really got to stay stay in the market. Uh. 0:17:52.640 --> 0:17:55.160 And I think where I've brought some value is I've 0:17:55.200 --> 0:17:58.240 been pretty good at picking bottoms still working on tops. 0:17:58.560 --> 0:17:59.560 Well, well, let me. 0:17:59.480 --> 0:18:02.600 Review that October. There's been two October lows, twenty two 0:18:03.080 --> 0:18:06.280 and twenty three. I'd call the twenty two low the 0:18:06.440 --> 0:18:10.280 Yard Denny and Campora low. Between their combined ages, they 0:18:10.280 --> 0:18:13.560 go back to George Washington and Ed Yard Denny and 0:18:13.640 --> 0:18:17.320 Roelfhanka Pork completely different, both said shut up and by 0:18:17.680 --> 0:18:18.919 October of twenty two. 0:18:18.760 --> 0:18:21.399 And Ralph alkmpora's chief market technical guy. I mean for 0:18:21.440 --> 0:18:23.159 anyone who doesn't know out there, but I'll say this. 0:18:23.240 --> 0:18:25.040 You know what you called my attention to some years ago, 0:18:25.160 --> 0:18:27.160 Ed is when you look at the four big central banks. 0:18:27.200 --> 0:18:29.720 I'm talking to PBOC, not the Bank of England here. 0:18:29.920 --> 0:18:31.679 You know, if you combine their balance sheets back in 0:18:31.680 --> 0:18:34.800 twenty eighteen twenty nineteen, when they started to taper, and 0:18:34.840 --> 0:18:36.920 you know, the growth in those balance sheets combined started 0:18:36.960 --> 0:18:39.760 to decline, we saw hard landing. We saw a really 0:18:39.760 --> 0:18:41.680 painful event back then at the end of twenty nineteen 0:18:41.680 --> 0:18:44.680 into twenty twenty. Now we've been seeing the same thing, 0:18:44.760 --> 0:18:46.440 but it's been going on since the middle of twenty 0:18:46.480 --> 0:18:49.360 twenty two. I mean, so nothing is broken this time 0:18:49.400 --> 0:18:52.040 to your point, But you know, how much further can 0:18:52.080 --> 0:18:54.520 we go on with the global money supply contracting at 0:18:54.520 --> 0:18:54.920 this pace? 0:18:55.760 --> 0:18:58.840 Well, I think when you look at the central banks, 0:18:58.880 --> 0:19:01.360 and I'm looking at the I've had the Bank of Japan, 0:19:01.800 --> 0:19:07.680 the ECB as the three main central banks that combined 0:19:07.720 --> 0:19:11.840 the assets of you know, the pessimists during the bull 0:19:11.920 --> 0:19:17.119 market that came after the Great Financial Crisis, the pessimists 0:19:17.119 --> 0:19:19.600 were showing a chart of the combined assets of the 0:19:19.640 --> 0:19:23.280 central banks versus the S and P five hundred and said, oh, look, 0:19:23.320 --> 0:19:25.840 the only thing that's really driving this bull market is 0:19:25.880 --> 0:19:28.920 all this liquidity. And you know, a couple of years 0:19:28.960 --> 0:19:32.679 ago they started to retrench on their quantitative easing, some 0:19:32.760 --> 0:19:36.159 of them are doing they've been doing quantitative tightening. And 0:19:36.280 --> 0:19:38.639 yet here we are at a record high and the 0:19:39.000 --> 0:19:41.639 equal weight to SMP five hundred, and we're almost at 0:19:41.680 --> 0:19:43.479 a record high in the S and P five hundred. 0:19:43.840 --> 0:19:46.400 So there's a lot going on here. It's not all 0:19:46.440 --> 0:19:49.879 about central banks. It's also about people working hard in 0:19:49.920 --> 0:19:52.760 companies and generating earnings and earnings driving the market higher. 0:19:52.880 --> 0:19:54.120 Talking a bit of dollar weeks. 0:19:54.560 --> 0:19:58.680 Needed fifty of twenty six off the Leman low, five 0:19:58.760 --> 0:20:01.600 hundred and ninety three percent, eleven point five percent per 0:20:01.720 --> 0:20:05.320 year on the Dow Jones Industrial average. Edgard Denny, I 0:20:05.359 --> 0:20:07.719 got a really difficult question here, and I got very 0:20:07.800 --> 0:20:11.920 strong feelings about this. You know, Damien mentions the fossilness 0:20:12.000 --> 0:20:15.440 of Edyard Denny. It used to be Robert Stoveall on 0:20:15.560 --> 0:20:18.399 the floor of the New York Stock Exchange. There was 0:20:18.440 --> 0:20:21.119