Speaker 1: Bloomberg Audio Studios, podcasts, radio news joining us.
Speaker 2: In the last forty eight hours the Great Bullmarket Pinata Edward,
Speaker 2: you heard Denny joines of your Denny research. Have the
Speaker 2: last forty eight hours been? Would I believe you just
Speaker 2: shifted probabilities absolutely of your roaring thesis?
Speaker 3: Well?
Speaker 2: It been.
Speaker 3: I got to be a bit of a realist given
Speaker 3: what is going on. Yeah, I'm still sticking with sixty
Speaker 3: percent for what I call the Roaring twenty twenties. However,
Speaker 3: I had given twenty percent to a melt up because
Speaker 3: things kind of had that potential. Still, it's not a
Speaker 3: high probability, and twenty percent to melt down or a
Speaker 3: ssshon kind of a bucket for everything that could go wrong. Well,
Speaker 3: now I'm just five percent for a melt up that's
Speaker 3: very unlikely, and thirty five percent for things going wrong,
Speaker 3: which they are.
Speaker 2: Amazon does thirty seven to forty two billion dollar bond offering.
Speaker 2: Damien tells me it's going to be six phone calls.
Speaker 2: Heath Terry brilliant Overt City Group publishes and reaffirms AI
Speaker 2: viability in revenue, in profit, in getting things done. With
Speaker 2: all that, I agree with it. Kep x synthesize in
Speaker 2: as you mentioned, spreads have an a move, the bond
Speaker 2: market screaming stability. These other news items screen fold them
Speaker 2: into your roaring twenties theme.
Speaker 3: Well, I mean, we've we've done pretty well with a
Speaker 3: thesis so far. We've got a few more years here
Speaker 3: left in the decade. I think this will pass.
Speaker 2: You're short selling yourself, folks. It's the Denny and Kampoor
Speaker 2: low of October a few years ago and in Ralph
Speaker 2: and Comport, thank you nailed it. Continue, thank you very much.
Speaker 3: So look, I think in the short term we clearly
Speaker 3: have an issue with the strait of our moves. It's
Speaker 3: hard to get optimistic here unless we see some tankers
Speaker 3: actually going through there without any incident. I know the
Speaker 3: President sounds like he wants to declare victory here pretty shortly,
Speaker 3: but you know, I think Iran lost the war. They
Speaker 3: just don't really know it and they're not acting like it.
Speaker 3: The problem with this country is that it's a terrorist
Speaker 3: state with a terrorist organization that basically spreads terrorism around
Speaker 3: the world, and they're professional terrorists, and so it's very
Speaker 3: hard to kind of beat them just by blessing them
Speaker 3: with the bombs.
Speaker 1: And back in December you correctly, I'm going to give
Speaker 1: it at a softball here. He correctly called for an
Speaker 1: underway position in the Max seven and the baskets now down
Speaker 1: six point three percent year to date. I'm curious, do
Speaker 1: you see further weakness in US tech stocs right here
Speaker 1: right now? Or is this a buying opportunity.
Speaker 3: Well, I think it's becoming very bifurcated. The companies that
Speaker 3: still have moats, the companies that you know are basically
Speaker 3: competing in still fairly stable marketplaces, I think are fine.
Speaker 3: The problem for the magnificence of it is that they
Speaker 3: used to be kind of like the Game of Thrones.
Speaker 3: You know, it's like seven independent kingdoms that had motes
Speaker 3: and didn't really bother each other. But ever since AI,
Speaker 3: they're competing like mad and it's you know, it's a
Speaker 3: AI arms race.
Speaker 2: Already continue with that. Your Deney doctor, your Denny of
Speaker 2: your Denny research, can't say enough about his research. It's
Speaker 2: exceptionally value your Denny report that you get from him,
Speaker 2: literally on a daily basis. Damian Sas are in time
Speaker 2: king with your Denny. We'll move forward here in a
Speaker 2: bit too further discussion of what we saw in the
Speaker 2: Secretary of Defense's press conference here a bit ago, but
Speaker 2: it is about the markets. Here's the summary for those
Speaker 2: of you across this nation waking up the VICS was
Speaker 2: thirty five. That is painful. We've come in dramatically to
Speaker 2: a twenty four point five seven with redd and green
Speaker 2: on the screen. But it decided lead better take today
Speaker 2: than what we witnessed in the last forty eight hours.
Speaker 2: With the market opening, Alexis Christophers.
Speaker 4: All right, thanks very much, Tom, and investors continuing to
Speaker 4: try to assess how long this war with Iran will
Speaker 4: go on and what its global impact will be, especially
Speaker 4: on the oil market. So we have a mixed start
Speaker 4: here to the morning. The S and P five hundred
Speaker 4: down three points at sixty seven to ninety three, Dow
Speaker 4: Jones Industrial Average down about twenty five points, but the
Speaker 4: Nasdaq and the Green right now by about forty two points.
Speaker 4: So Russell two thousand is down just fractionally. We've got
Speaker 4: Brent crude at ninety one forty four, the barrel down
Speaker 4: seven and a half percent, WTI crewed down about to
Speaker 4: seven percent now to eighty eighth four the barrel and
Speaker 4: the Bloomberg dollars Spot Index at eleven ninety seven eighty
Speaker 4: four spot Gold by the way bouncing back up one
Speaker 4: and a half percent at fifty two to fifteen the ounce,
Speaker 4: and Amazon returning to the bond market, selling the debt
Speaker 4: and as many as eleven tranches ranging from two to
Speaker 4: fifty years. It's the latest in a series of jumbo
Speaker 4: bond sales by hyperscalers as they gear up to invest
Speaker 4: in what else but AI. That's your Bloomberg opening bell report,
Speaker 4: Tom and Damien.
Speaker 2: Alexis, thank you so much again, ready green in the
Speaker 2: screen Nasdaq with a little bit of the bid twenty
Speaker 2: four point twenty five in the thanks Ed. You're Denny
Speaker 2: with us always associated with Professor Tobin at Yale, but
Speaker 2: before that high above Cayuga's Waters at Cornell University as
Speaker 2: our prosad is one of the great optimists of international economics.
Speaker 2: His new book out of Cornell is The Doom Loop
Speaker 2: on the Economic Order. He even gets Game of Thrones
Speaker 2: into the first chapters. Scott Serse, doing an economics you
Speaker 2: more than anyone I know ed, pushes against the concept
Speaker 2: of a doom loop. What do you say to the
Speaker 2: people that feel the gloom, feel the doom.
Speaker 3: Well, you know, there are a fair amount of bears
Speaker 3: out there, and a lot of people listen to the
Speaker 3: perma bears, and that perma bears very often sound very logical.
Speaker 3: The problem is they don't provide a balance. And perma
Speaker 3: bears will get you out at the top of the
Speaker 3: stock market, they'll get you out in the middle, they'll
Speaker 3: get you at the bottom at the bottom. You'll never
Speaker 3: be in the stock market if you'd have a pessimistic attitude. Also,
Speaker 3: politics sometimes gets in the way of clear and clear
Speaker 3: headed investing. The market tends to go up as long
Speaker 3: as earnings are going up, as long as the economy
Speaker 3: is doing well, and that's been the case for a
Speaker 3: long long time. So I have this view that corrections
Speaker 3: and bear markets are buying opportunities rather than reasons to panic.
Speaker 1: Well, and you talk about the economy doing well in
Speaker 1: all seriousness, does economic deity even matter at this point?
Speaker 1: I mean, look at last week's payrolls. I mean the
Speaker 1: markets look straight through that for like three seconds, and
Speaker 1: then tomorrow we're going to get a CPI print that,
Speaker 1: by definition, after the last week's events, is already stale.
Speaker 1: So you know, talk to us little bit about the
Speaker 1: economic touch points that you're going to be most focused
Speaker 1: on here.
Speaker 3: Well, look, I think that the economy still matters, because
Speaker 3: earning still matters. One of the I used to be
Speaker 3: just an economist and also a strategist, and being a
Speaker 3: strategist is a lot easier. All you got to do
Speaker 3: is forecast pe time Z, and that's very easy to do.
Speaker 3: Getting it right, of course, is the challenge, but it's
Speaker 3: still it's still those two variables, and the earnings outlook
Speaker 3: I think remains quite strong because I think the economy
Speaker 3: will remain resilient. I mean, in twenty twenty two we
Speaker 3: had an oil price shock and the economy made through
Speaker 3: it just fine. I think the data that the stock
Speaker 3: market is looking at is not just the employment numbers,
Speaker 3: but they're looking at the productivity numbers. And that's really
Speaker 3: the bullish story, is that the productivity is making a
Speaker 3: huge comeback.
Speaker 1: Well, and we began our conversation Tom mentioning that you
Speaker 1: had upped your probability from market meltdown from twenty to
Speaker 1: thirty five percent for the balance of this year. You know,
Speaker 1: my question is this, you know, when I think meltdown,
Speaker 1: I think of something on the order of a systemic
Speaker 1: liquidity shock. And this is a different sort of shock
Speaker 1: than we witnessed, you know, in two thousand and another.
Speaker 1: You know, kind of pre what funding and financing metrics
Speaker 1: are you most focused on here? Like, what kind of
Speaker 1: a liquidity shock do you think can happen?
Speaker 3: Well, clearly, when you look at history, you find that
Speaker 3: more often than that it's a shock in the credit
Speaker 3: system that causes problems for the stock market and get
Speaker 3: a financial crisis because of FED tight and something blows
Speaker 3: up and that becomes a credit crunch. It's credit crunch
Speaker 3: is the cause of recessions this time around. I think
Speaker 3: we have to recognize remember that the Fed's are awfully
Speaker 3: good at playing whack a mole in the credit markets.
Speaker 3: You know, as soon as something blows up, they move
Speaker 3: in pretty quickly. March twenty twenty three, we had a
Speaker 3: banking crisis. There's only three banks that it was solved
Speaker 3: over the weekend.
Speaker 2: Yeah, I get fifteen ways to go here, But let
Speaker 2: me just go to the experience I mentioned earlier, this
Speaker 2: modest drawdown we had in nineteen eighty seven. In my memory,
Speaker 2: I don't have in front of me, folks is what
Speaker 2: a rebound from October twenty seventh to the end of
Speaker 2: the year December of nineteen eighty seven. I remember the
Speaker 2: sweat in August of nineteen ninety eight, and off we
Speaker 2: went to the race to the range of nine. What's
Speaker 2: different now in tech versus the collapse of March of
Speaker 2: two thousand and one earnings.
Speaker 3: We had a lot of dot coms back then that
Speaker 3: weren't making any money. We had a lot of telecom
Speaker 3: companies that were solar financing, so they're kind of creating
Speaker 3: their own magic. Until these companies, these mag seven started
Speaker 3: to kind of finance each other, we didn't really have
Speaker 3: that issue. But they're huge cast generators. I think their
Speaker 3: expenditures are going to prove to be very profitable, so
Speaker 3: I'm not particularly worried about the earning side of the
Speaker 3: text story.
Speaker 2: It's part of the show this morning commercial Free the
Speaker 2: conversation too Important at your Donna das FENDERI coming on
Speaker 2: here in a moment Damian Sasar and Tom Kane with
Speaker 2: Alexis Christopherus and Michael Barr across this nation on YouTube.
Speaker 2: What a couple of days on YouTube. Thank you so
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Speaker 2: do here in the New York Morning, Damien Sasaur with
Speaker 2: Ed your Denny so Ed.
Speaker 1: We talk about the Roaring twenties theme. We talk about,
Speaker 1: you know, the potential for market mail down and market
Speaker 1: melt up. Talk to me about your stagflationary nineteen seventies
Speaker 1: reduce theme, redo, reducts, redux, reducs.
Speaker 2: If you're an em it's reduced. We call that redus.
Speaker 1: I mean, I mean the stagflationary. You know, you know
Speaker 1: that that word's coming back. So talk to us a
Speaker 1: little bit about what you're seeing there.
Speaker 3: Yeah, there is a certain amount of deja voo all
Speaker 3: over again. You know, every time we've had oil shocks
Speaker 3: in the past, we've typically gotten a recessions and bear markets.
Speaker 3: The one near term exception was what happened in twenty
Speaker 3: twenty two. We got a bear market, but we didn't
Speaker 3: get a recession. I don't think we're going to get
Speaker 3: a recession this time. The recessionary expectations have gone up,
Speaker 3: but the US is much less energy intensive and oh,
Speaker 3: by the way, we're an exporter, yeah, of oil and gas,
Speaker 3: which is a huge difference for what happened in the
Speaker 3: nineteen seventies. On the other hands, shutting the Strait of
Speaker 3: Hermus is a radically different historical development just hasn't happened before,
Speaker 3: and so my short term caution bearishness is totally predicated
Speaker 3: in this geopolitical development. I want to see some tankers
Speaker 3: get through the strait without getting shot at.
Speaker 2: Well.
Speaker 1: I mean you just mentioned that, and that's where I
Speaker 1: was going to go. I mean, golf traffic is basically
Speaker 1: all for not right. I mean, there's nothing going through.
Speaker 1: And you know, we just saw last week US Treasury
Speaker 1: Secretary and a Scott Best and basically slamming you know,
Speaker 1: GP Morgan for putting out research about maritime insurance and
Speaker 1: things of that nature. You know, how focused are you
Speaker 1: on some of those alternative data sets, you know, kind
Speaker 1: of trying to gauge out, you know, whether or not shipping.
Speaker 1: You know, companies even want to you know, pass through
Speaker 1: the street of removes now and back.
Speaker 3: I mean, who knows, it's funny you asked that. One
Speaker 3: of the reasons I'm I'm very positive on AI is
Speaker 3: because we're using it all the time and we've become
Speaker 3: real fans of Claude, and so Claude is uh is
Speaker 3: in our staff now and that we're we're toying around.
Speaker 3: We're just asking Claude to follow the shipping lanes in
Speaker 3: the Strait and there there's actually data. So but we
Speaker 3: only started doing it yesterday. So the other thing is
Speaker 3: there's there. I also want to see the data on drones.
Speaker 3: I mean, it's it's it's fine for the president, you know,
Speaker 3: to declare that we're almost there, almost mission accomplished, but uh,
Speaker 3: that's not that's not going to be the case unless
Speaker 3: the drones stopped flying into uh the neighbor, into the Straits,
Speaker 3: into you know, aiming at our ships.
Speaker 2: In Andy March thirty one, I believe it's another end
Speaker 2: of the quarter if we can get there, and then
Speaker 2: into April and JP Morgan reporting and off we go
Speaker 2: to the Q one earning season. What does end your
Speaker 2: Denny see with a broader sense of use of cash?
Speaker 3: Well, you know, right now, the earning story has been
Speaker 3: phenomenally strong, and that's really what's been driving the market.
Speaker 3: The evaluation multiple you know, got up to about twenty two.
Speaker 3: It's come down because of this pullback so far, which
Speaker 3: is it's not a correction yet, but I think it
Speaker 3: has that.
Speaker 2: Why I got this is too important? Since when are
Speaker 2: we hysterical about your Denny pullback that, as you state,
Speaker 2: is not a correction as we learned it in school.
Speaker 3: Well, you know, a pullback is a drop that isn't
Speaker 3: a correction. A correction is ten to twenty percent decline.
Speaker 3: A bear market is more than twenty percent. I happen
Speaker 3: to think that there is a thirty five percent the
Speaker 3: probability of things going badly, and that would lead to
Speaker 3: a correction of ten to fifteen percent. I'm actually amazed
Speaker 3: by the resilience of the of the not just the economy,
Speaker 3: but the stock market. The stock market wants to believe
Speaker 3: that all will be well, very very shortly. We saw
Speaker 3: this amazing reversal also in the price of oil, as
Speaker 3: though you know, what, were we thinking there's plenty of
Speaker 3: oil out there. Well, there's plenty of oil out there.
Speaker 3: We just got to get get to.
Speaker 2: It quick, one quick one.
Speaker 1: Well, I mean ed what you sound It sounds like
Speaker 1: you're talking about just cleaner positions, right, And I mean,
Speaker 1: if this is really what this amounts to, where you
Speaker 1: basically are giving a lot of you know, risky investors
Speaker 1: the opportunity to kind of you know, pair back to
Speaker 1: positions and clean them, so to speak. Does that mean
Speaker 1: we might look for another leg higher into the you know,
Speaker 1: second half of this year. And can we really even
Speaker 1: see that?
Speaker 3: Well, I haven't given up on seventy seven hundred by
Speaker 3: the end of the year. I can so yeah, I'm
Speaker 3: I'm arguing that it's not necessarily going to be a
Speaker 3: few more days of the war, but it could be
Speaker 3: a few more weeks, and that again, I have this
Speaker 3: tendency to look at soopica's buying opportunities rather than reasons
Speaker 3: to panic.
Speaker 2: Thank you for coming in.
Speaker 3: My pleasure always.
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