WEBVTT - Single Best Idea with Tom Keene: Stephen Auth & Dean Curnutt

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Single best idea and just a great set of conversations today.

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<v Speaker 2>One of the high points, so Stephen Kim came in

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<v Speaker 2>from Evercore ISI on the American housing market. It was

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<v Speaker 2>really really informative, just as one of the moments today,

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<v Speaker 2>very big equity day, if you will. We started strong

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<v Speaker 2>with Stephen Oth. We've federated our mess. Stephen oth is

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<v Speaker 2>just iconic decades of experience here and he does what

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<v Speaker 2>the adults do. Not the next month, guests, the next

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<v Speaker 2>year guess, but can they try to reach out to

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<v Speaker 2>the might of the American economy to get to a

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<v Speaker 2>two year view? Here off federated our mess.

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<v Speaker 3>We've got a two year target of eighty six hundred.

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<v Speaker 3>We've got seventy eight hundred for next year, and really

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<v Speaker 3>driven by earnings growth. At this stage, we've got earnings

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<v Speaker 3>at yeah, three ninety out three years and you know,

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<v Speaker 3>stocks et nominal DDP growth, nominal GDP growth looks really

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<v Speaker 3>good to us. You've got the AI revolution driving earnings,

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<v Speaker 3>You've got enormous productivity. We've got GDP next year up

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<v Speaker 3>three percent. I think the consensus is too We've been

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<v Speaker 3>on the high side. All along, we've been more right

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<v Speaker 3>than wrong on that. But you know, you've got a

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<v Speaker 3>lot of stimulus coming next year that we think could

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<v Speaker 3>get you a surprise on the upside.

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<v Speaker 2>A lot of different opinions out there. It's outlookd time

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<v Speaker 2>I make a joke about it. Sam Ro does a

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<v Speaker 2>great job over at TK of looking at each and

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<v Speaker 2>every outlook. I'm sure I'll have a summary at some point,

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<v Speaker 2>but I got to admit the needles tilted towards a

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<v Speaker 2>more optimistic assessment right now. We shall see. We spoke

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<v Speaker 2>with Dean Kurrent. He is definitive in the derivative space.

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<v Speaker 2>The dynamics of options and futures there leverage nature and

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<v Speaker 2>all those Greek letters as well. Here dean current of

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<v Speaker 2>macro Risk Advisors on the linkage of the standard impoores

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<v Speaker 2>five hundred to the VIX.

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<v Speaker 1>If we look at the SMP, its relationship with the

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<v Speaker 1>VIX is as old as time. You know, you can

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<v Speaker 1>go back to the late eighties, the nineties and so forth,

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<v Speaker 1>and it's always stocks up vixed down. That correlation is

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<v Speaker 1>around negative eighty percent, but for the stocks themselves, So

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<v Speaker 1>when the SMP rises, the VIX falls, but for single stocks,

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<v Speaker 1>and it's not just meme stocks like GameStop. It could

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<v Speaker 1>be Google, it could be Broadcom. The stocks are rising

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<v Speaker 1>and the market is assigning a higher implied volatility. It's

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<v Speaker 1>a great question, and it really to me reflects a

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<v Speaker 1>unique component, which is the stocks are options. In other words,

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<v Speaker 1>when the stock rises, the potential that it rises much

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<v Speaker 1>more actually goes up as well.

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<v Speaker 2>Just a window in the dynamics of derivatives and the

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<v Speaker 2>movements that you see and options. I have a role

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<v Speaker 2>of an option being four times leveraged to the underlying stock.

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<v Speaker 2>That's just a rough, rough role, but that's some of

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<v Speaker 2>the game you can play with options. Dean Kurnat talking

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<v Speaker 2>there about the advantages of hedging your guests instead of

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<v Speaker 2>a pure play in options. On the podcast, we're on Apple,

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<v Speaker 2>we're in Spotify, others as well, including YouTube podcasts. A

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<v Speaker 2>single best idea