1
00:00:02,400 --> 00:00:06,720
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:06,880 --> 00:00:08,719
Speaker 2: We'll begin this out with stocks at all time highs

3
00:00:08,720 --> 00:00:11,000
Speaker 2: ahead of CPI, the next key data point for the

4
00:00:11,000 --> 00:00:14,200
Speaker 2: Fed after September's blowout jobs report. Mike Wilson of Morgan

5
00:00:14,280 --> 00:00:17,720
Speaker 2: Stanley updating his outlook, writing Friday, strong job data and

6
00:00:17,840 --> 00:00:20,439
Speaker 2: our economists call for a series of twenty five basis

7
00:00:20,440 --> 00:00:23,360
Speaker 2: point breat cuts from here lead us to upgrade cyclicals

8
00:00:23,360 --> 00:00:27,480
Speaker 2: to overweight relative to defensive. Mike joins us now for more. Mike,

9
00:00:27,480 --> 00:00:29,320
Speaker 2: good morning morning. How are you, Jon, I'm good. It's

10
00:00:29,320 --> 00:00:31,040
Speaker 2: good to see you. Let's talk about that overweight to

11
00:00:31,040 --> 00:00:33,479
Speaker 2: cyclic calls. Walk me through what's behind that and what

12
00:00:33,600 --> 00:00:35,200
Speaker 2: kind of names you want to be behind at the moment.

13
00:00:35,360 --> 00:00:36,600
Speaker 3: Yeah, it's a very nuanced calls.

14
00:00:36,600 --> 00:00:38,000
Speaker 4: We want to be a crystal clear about what we

15
00:00:38,240 --> 00:00:41,440
Speaker 4: like within cyclic calls. Look, we're still not that convinced

16
00:00:41,479 --> 00:00:44,120
Speaker 4: that there's going to be some big, robust recovery. That's

17
00:00:44,159 --> 00:00:47,360
Speaker 4: when you really want to buy the early cycle kind

18
00:00:47,360 --> 00:00:49,519
Speaker 4: of cyclicals, and we're not in that camp. We're still

19
00:00:49,560 --> 00:00:52,160
Speaker 4: in the late cycle momentum here. But remember this market

20
00:00:52,200 --> 00:00:54,600
Speaker 4: has gone back and forth as the economy, economic data

21
00:00:54,600 --> 00:00:55,639
Speaker 4: has come in differently this year.

22
00:00:55,680 --> 00:00:57,520
Speaker 3: Beginning of there was a no landing scenario.

23
00:00:57,840 --> 00:00:59,520
Speaker 4: Then we kind of reverted back to this sort of

24
00:00:59,640 --> 00:01:01,400
Speaker 4: you know, off landing and an even a hard landing

25
00:01:01,480 --> 00:01:03,920
Speaker 4: risk this summer, and now we're kind of back moving

26
00:01:03,960 --> 00:01:06,400
Speaker 4: towards the no landing. So we're just trying to trade

27
00:01:06,400 --> 00:01:08,280
Speaker 4: this back and forth, and we've been we've been actually

28
00:01:08,319 --> 00:01:11,240
Speaker 4: trading the rotations quite well this year, and so we're

29
00:01:11,280 --> 00:01:12,840
Speaker 4: just taking a you know, we've had a great call

30
00:01:12,920 --> 00:01:13,720
Speaker 4: on the defensive.

31
00:01:14,000 --> 00:01:15,560
Speaker 3: Let's say we took that out three weeks ago.

32
00:01:15,600 --> 00:01:17,880
Speaker 4: We neutralize that, and now we're just saying, look, you

33
00:01:17,920 --> 00:01:19,480
Speaker 4: can step in a little bit more to the late

34
00:01:19,560 --> 00:01:20,400
Speaker 4: cycle cyclical.

35
00:01:20,440 --> 00:01:21,479
Speaker 3: So that's quality names.

36
00:01:21,600 --> 00:01:24,960
Speaker 4: It's not buying the early cycle junkie, bad balance sheet

37
00:01:24,959 --> 00:01:28,640
Speaker 4: type names. This is materials, this is industrials. Okay, this

38
00:01:28,760 --> 00:01:31,480
Speaker 4: is some of the quality maybe software names to some

39
00:01:31,560 --> 00:01:35,280
Speaker 4: degree because they're they're they're pro cyclical. It's not it's

40
00:01:35,319 --> 00:01:37,480
Speaker 4: not a wholesale you know, go down and buy the junk.

41
00:01:37,520 --> 00:01:39,200
Speaker 3: That's that's what we want to make clear here.

42
00:01:39,240 --> 00:01:41,520
Speaker 2: I've been through enough psychos with you now to remember that. Also,

43
00:01:41,600 --> 00:01:43,679
Speaker 2: you mentioned I remember a long time ago late cycle

44
00:01:44,040 --> 00:01:45,640
Speaker 2: energy you didn't mention energy this time.

45
00:01:45,680 --> 00:01:45,920
Speaker 3: Why not?

46
00:01:46,200 --> 00:01:48,240
Speaker 4: Well, I didn't mention it, but we are overweight energy.

47
00:01:48,360 --> 00:01:50,160
Speaker 4: Now that's been more of a head for us on

48
00:01:50,200 --> 00:01:52,400
Speaker 4: the geopolitical risk. And we you know, to be honest,

49
00:01:52,400 --> 00:01:53,760
Speaker 4: we had a bad call on energy. We kind of

50
00:01:53,840 --> 00:01:56,480
Speaker 4: upgraded in March. It worked really well until April. It's

51
00:01:56,520 --> 00:01:57,960
Speaker 4: you know, hasn't done well since then, but now it's

52
00:01:57,960 --> 00:02:00,080
Speaker 4: sending a little bit of a comeback. So for us,

53
00:02:00,200 --> 00:02:03,120
Speaker 4: we like materials and industrials more than energy, but energy

54
00:02:03,160 --> 00:02:04,520
Speaker 4: is are good heads against what's going on in the

55
00:02:04,520 --> 00:02:06,440
Speaker 4: Middle East, and just you know, the fact that maybe

56
00:02:06,480 --> 00:02:08,240
Speaker 4: we things do accelerate and maybe we do get.

57
00:02:08,080 --> 00:02:09,400
Speaker 3: Better demand in the energy side.

58
00:02:09,480 --> 00:02:11,400
Speaker 4: It is cheap, right, And that's the other reason we

59
00:02:11,440 --> 00:02:13,600
Speaker 4: have great financials this past week is because as rates

60
00:02:13,600 --> 00:02:15,519
Speaker 4: go back up at the back end, financials tend to

61
00:02:15,560 --> 00:02:15,680
Speaker 4: do a.

62
00:02:15,680 --> 00:02:16,239
Speaker 3: Little bit better.

63
00:02:16,360 --> 00:02:18,400
Speaker 1: Okay, That's where I wanted to go this question of

64
00:02:18,440 --> 00:02:21,880
Speaker 1: the relationship tom ponds and stocks, because we saw for

65
00:02:21,919 --> 00:02:23,720
Speaker 1: a while there was a feeling that if yields went

66
00:02:23,840 --> 00:02:26,960
Speaker 1: higher that would be punitive for equity valuations, and then

67
00:02:27,040 --> 00:02:30,160
Speaker 1: recently that hasn't been the case. Has that been surprising

68
00:02:30,200 --> 00:02:30,959
Speaker 1: to you well.

69
00:02:30,800 --> 00:02:32,440
Speaker 4: Now, I mean think about this, right, So the mag

70
00:02:32,520 --> 00:02:35,160
Speaker 4: seven or you know, some of the expensive growth names

71
00:02:35,160 --> 00:02:38,160
Speaker 4: since July have really underperformed. In fact, that group has

72
00:02:38,200 --> 00:02:40,919
Speaker 4: not made a new high. So the market is sort

73
00:02:40,960 --> 00:02:44,400
Speaker 4: of punishing the more expensive stocks for the higher rates.

74
00:02:44,400 --> 00:02:46,160
Speaker 4: And that's part of our call too, is that part

75
00:02:46,160 --> 00:02:47,880
Speaker 4: of this rotation back towards.

76
00:02:47,600 --> 00:02:49,600
Speaker 3: State quality, cyproncals or some of the.

77
00:02:49,560 --> 00:02:51,600
Speaker 4: Other names that haven't worked so well this year is

78
00:02:51,639 --> 00:02:55,280
Speaker 4: just money leaving the big winners as rates back up. So,

79
00:02:55,320 --> 00:02:57,240
Speaker 4: as we wrote in the note last week, the biggest

80
00:02:57,360 --> 00:02:59,920
Speaker 4: confirmation to me that this data last week was some

81
00:03:00,080 --> 00:03:03,040
Speaker 4: what real is a two year yields in particular really,

82
00:03:03,320 --> 00:03:06,040
Speaker 4: I mean really ripped, okay, and ten year yields ripped

83
00:03:06,040 --> 00:03:09,080
Speaker 4: at the same time. That's the bond market finally saying, hey,

84
00:03:09,160 --> 00:03:12,520
Speaker 4: maybe there is something to this soft landing and maybe

85
00:03:12,560 --> 00:03:14,639
Speaker 4: things can actually hold in here, because the bond market

86
00:03:14,639 --> 00:03:17,200
Speaker 4: has been very skeptical really up until last week.

87
00:03:17,280 --> 00:03:18,200
Speaker 3: And that's a big deal.

88
00:03:18,400 --> 00:03:21,200
Speaker 1: So if I'm hearing what you're saying and taking it

89
00:03:21,280 --> 00:03:24,080
Speaker 1: a step further, is it correct to say that the

90
00:03:24,080 --> 00:03:27,480
Speaker 1: big tech companies, based on their valuations, are actually more

91
00:03:27,560 --> 00:03:31,480
Speaker 1: highly levered to rates being somewhat lower, and that the

92
00:03:31,480 --> 00:03:35,280
Speaker 1: cyclical companies are less sort of tied to that in

93
00:03:35,320 --> 00:03:37,400
Speaker 1: terms of valuation. In other words, they don't need money

94
00:03:37,400 --> 00:03:40,160
Speaker 1: to be cheap forever for them to maintain their valuation.

95
00:03:40,280 --> 00:03:41,400
Speaker 1: Is that basically what you're looking at.

96
00:03:41,480 --> 00:03:43,960
Speaker 4: Yeah, and once again we did neutralize our small cap

97
00:03:44,160 --> 00:03:46,560
Speaker 4: versus large cap call issue. We don't want you buying

98
00:03:46,560 --> 00:03:50,320
Speaker 4: small caps wholesale. Same thing. Quality stocks do better, and

99
00:03:50,320 --> 00:03:52,800
Speaker 4: that's not the low quality stuff, because let's not forget

100
00:03:53,040 --> 00:03:55,720
Speaker 4: low quality, bad balance sheet small cap companies are not

101
00:03:55,720 --> 00:03:58,120
Speaker 4: going to do well until rates really come down. All

102
00:03:58,160 --> 00:04:00,200
Speaker 4: we're saying on the big cap tech stocks is two

103
00:04:00,200 --> 00:04:02,240
Speaker 4: things going on. Number One, yeah, they got a look expensive,

104
00:04:02,240 --> 00:04:03,280
Speaker 4: they're probably overhewned.

105
00:04:03,320 --> 00:04:05,400
Speaker 3: But also the fundamentals are deteriorating a bit.

106
00:04:05,480 --> 00:04:08,400
Speaker 4: Right last quarter, the market wasn't that excited about some

107
00:04:08,440 --> 00:04:11,160
Speaker 4: of the spending the hyperscalers were doing without showing the

108
00:04:11,240 --> 00:04:12,320
Speaker 4: returns are getting.

109
00:04:12,040 --> 00:04:13,720
Speaker 3: On the revenue side. So that group to me, looks

110
00:04:13,720 --> 00:04:14,720
Speaker 3: like it's just taking a break.

111
00:04:14,880 --> 00:04:16,919
Speaker 4: It's not that it's gonna, you know, crash here and

112
00:04:17,240 --> 00:04:18,840
Speaker 4: rates are going to ruin the whole story.

113
00:04:19,000 --> 00:04:20,240
Speaker 3: It's just the got overcooked.

114
00:04:20,240 --> 00:04:22,520
Speaker 4: And we wrote about that two months ago and since then,

115
00:04:22,560 --> 00:04:25,120
Speaker 4: that's that's exactly what's happening. But that's the fuel for

116
00:04:25,200 --> 00:04:27,440
Speaker 4: some of these other underperforming areas to work, even China.

117
00:04:27,560 --> 00:04:29,400
Speaker 4: Quite frankly, I mean, part of the reason why China

118
00:04:29,480 --> 00:04:32,400
Speaker 4: ripped so much, okay, was because the money. There's so

119
00:04:32,480 --> 00:04:34,719
Speaker 4: much money looking for a new theme, and it was like,

120
00:04:34,720 --> 00:04:37,479
Speaker 4: oh my goodness, there's a new shiny toy jumped in there,

121
00:04:37,720 --> 00:04:39,880
Speaker 4: popped up, and now we're selling off again. And that's

122
00:04:39,880 --> 00:04:41,599
Speaker 4: actually been our view too, is that we're not we're

123
00:04:41,640 --> 00:04:45,440
Speaker 4: not buyers of the big China stimulus. However, it can't

124
00:04:45,480 --> 00:04:48,000
Speaker 4: cost twenty or thirty percent moves because of you know,

125
00:04:48,000 --> 00:04:49,640
Speaker 4: the market is desperate for a new theme.

126
00:04:50,000 --> 00:04:52,279
Speaker 2: Well, a new theme of the SIFI before off type

127
00:04:52,279 --> 00:04:56,239
Speaker 2: of second. Well, the utilities utilises absolutely rip. They tupped

128
00:04:56,240 --> 00:04:58,000
Speaker 2: off type a second two dates before we got the

129
00:04:58,000 --> 00:05:01,000
Speaker 2: pain roaster pall. As you pointed out, yield It's utilities

130
00:05:01,000 --> 00:05:02,880
Speaker 2: have suffered. I want to talk about how time we'd

131
00:05:03,000 --> 00:05:05,680
Speaker 2: remove to that defensive away actually wants with regards to that,

132
00:05:06,080 --> 00:05:08,000
Speaker 2: we utilities a part of that co feeing.

133
00:05:08,240 --> 00:05:10,680
Speaker 4: Well, it was we basically the whole defensive sector. We

134
00:05:10,720 --> 00:05:12,240
Speaker 4: just said look, you can fade it here. We definitely

135
00:05:12,240 --> 00:05:14,599
Speaker 4: want you adding more risk within defensives. Utility is definitely

136
00:05:14,600 --> 00:05:16,760
Speaker 4: part of that. Now, Utilities is interesting this year because

137
00:05:16,800 --> 00:05:20,000
Speaker 4: it's a defensive play because of you know, it's always defensive,

138
00:05:20,200 --> 00:05:23,359
Speaker 4: but it also has this power story, and so we

139
00:05:23,440 --> 00:05:25,520
Speaker 4: kept that one as an overweight, but we're not adding

140
00:05:25,560 --> 00:05:29,360
Speaker 4: to it here because of that secular growth sort of story. Now,

141
00:05:29,440 --> 00:05:31,600
Speaker 4: it did sell off more than other defenses earlier this

142
00:05:31,600 --> 00:05:33,720
Speaker 4: week because I think it's crowded. You know, we showed

143
00:05:33,760 --> 00:05:37,200
Speaker 4: in our hundred percentile of ownership within our institutional base

144
00:05:37,279 --> 00:05:39,000
Speaker 4: of clients, so it's crowded.

145
00:05:39,160 --> 00:05:40,360
Speaker 3: I think it can hang in here.

146
00:05:40,920 --> 00:05:42,880
Speaker 4: The one thing about utilities that people don't appreciate is

147
00:05:42,880 --> 00:05:45,040
Speaker 4: if we if we go back into a kind of

148
00:05:45,080 --> 00:05:47,760
Speaker 4: hard landing scenario. I'm not particting that right now, but

149
00:05:47,800 --> 00:05:49,920
Speaker 4: if that would have happened, utilities send to do poorly

150
00:05:50,279 --> 00:05:52,800
Speaker 4: because their balance sheets are actually not particularly good. So

151
00:05:52,839 --> 00:05:54,040
Speaker 4: it's going to be interesting to see if they can

152
00:05:54,040 --> 00:05:55,960
Speaker 4: hold up into that. It should do better though in

153
00:05:56,000 --> 00:05:58,960
Speaker 4: the no landing or kind of you know, reacceleration story.

154
00:05:59,200 --> 00:06:01,480
Speaker 2: What a financial face in why the upgrade gun and

155
00:06:01,520 --> 00:06:02,800
Speaker 2: swatic season It's.

156
00:06:02,640 --> 00:06:05,719
Speaker 4: Similar to our call on the group the quality cyclicals.

157
00:06:05,760 --> 00:06:07,680
Speaker 4: So we are very distinct about this too. We don't

158
00:06:07,680 --> 00:06:09,800
Speaker 4: want to own the low quality financials. You want to

159
00:06:09,800 --> 00:06:13,080
Speaker 4: own companies that have the ability to see NIM expansion,

160
00:06:13,120 --> 00:06:16,000
Speaker 4: you know it, can can monetize that, or have capital

161
00:06:16,040 --> 00:06:18,960
Speaker 4: markets activities. So those are generally your larger cap financials,

162
00:06:19,000 --> 00:06:22,120
Speaker 4: your higher quality financials, and I think that's sort of

163
00:06:22,120 --> 00:06:23,160
Speaker 4: been showing his hand.

164
00:06:23,160 --> 00:06:24,520
Speaker 3: The other thing you have to keep in mind is

165
00:06:24,560 --> 00:06:25,320
Speaker 3: earlier in.

166
00:06:25,160 --> 00:06:28,320
Speaker 4: September there was an industry conference for the financials and.

167
00:06:28,320 --> 00:06:30,040
Speaker 3: They did lower the bar quite a bit.

168
00:06:30,440 --> 00:06:33,080
Speaker 4: So the expectations in that group going into this earning

169
00:06:33,120 --> 00:06:34,800
Speaker 4: season I think look particularly good.

170
00:06:35,600 --> 00:06:37,400
Speaker 1: You talked about the shiny new toy.

171
00:06:37,560 --> 00:06:39,360
Speaker 3: I want to talk about the shiny new toy and.

172
00:06:39,320 --> 00:06:41,760
Speaker 1: The sort of rolling ball of cash that just toe

173
00:06:41,920 --> 00:06:45,200
Speaker 1: looking for a new theme. When will that rolling ball

174
00:06:45,240 --> 00:06:47,280
Speaker 1: of cash not be a rolling ball of cash? When

175
00:06:47,279 --> 00:06:49,920
Speaker 1: will we not feel like there's this glut of money

176
00:06:50,160 --> 00:06:53,120
Speaker 1: looking to go somewhere. Why is that such a prevalent

177
00:06:53,200 --> 00:06:55,720
Speaker 1: theme in all of market actions so far this year?

178
00:06:56,200 --> 00:06:58,719
Speaker 4: I think it's just a classic late cycle phenomena, right,

179
00:06:58,760 --> 00:07:00,719
Speaker 4: I mean things are expensive, right, I mean, we're you know,

180
00:07:00,720 --> 00:07:03,000
Speaker 4: the FED is cutting, but they're cutting because growth is

181
00:07:03,080 --> 00:07:05,679
Speaker 4: still That is now the worry, and that's what stock

182
00:07:05,760 --> 00:07:08,719
Speaker 4: stocks need. Growth we need, like for a big sort

183
00:07:08,760 --> 00:07:12,320
Speaker 4: of broad rally in the small caps, lower quality areas.

184
00:07:12,360 --> 00:07:14,200
Speaker 4: We need either race to come down in a more

185
00:07:14,240 --> 00:07:17,520
Speaker 4: meaningful way to kind of jumpstart that recovery, or we

186
00:07:17,560 --> 00:07:20,800
Speaker 4: need you know, a reacceleration from a from a new

187
00:07:20,880 --> 00:07:22,280
Speaker 4: source of growth, and we don't.

188
00:07:22,400 --> 00:07:23,560
Speaker 3: We don't have that right now.

189
00:07:23,600 --> 00:07:26,480
Speaker 4: So instead of instead of having that rising tide, what

190
00:07:26,520 --> 00:07:29,040
Speaker 4: the market's doing is looking for individual themes. You know,

191
00:07:29,120 --> 00:07:32,280
Speaker 4: last year's GLPS it was Ai, of course, now it's

192
00:07:32,320 --> 00:07:35,760
Speaker 4: maybe it's China. You know, there's some industrial industrialization theme

193
00:07:35,800 --> 00:07:37,600
Speaker 4: that's been pretty exciting. We've been on that top of

194
00:07:37,600 --> 00:07:40,080
Speaker 4: that one. But these are these are temporary, right, and

195
00:07:40,120 --> 00:07:41,080
Speaker 4: the market is fickle.

196
00:07:41,240 --> 00:07:43,760
Speaker 3: It will it will, it will basically.

197
00:07:43,320 --> 00:07:46,200
Speaker 4: Throw the shiny new toy into the dustbin as soon

198
00:07:46,240 --> 00:07:48,480
Speaker 4: as it doesn't perform anymore. And we see that too,

199
00:07:48,520 --> 00:07:50,600
Speaker 4: So you just have to be very you know, willing

200
00:07:50,640 --> 00:07:53,200
Speaker 4: to be flexible. And we've we've we've adjusted our you know,

201
00:07:53,280 --> 00:07:55,240
Speaker 4: forecast this year for that same reason. We you have

202
00:07:55,280 --> 00:07:56,800
Speaker 4: to be flexible. You have to adjust what the market's

203
00:07:56,840 --> 00:07:57,240
Speaker 4: giving you.

204
00:07:57,280 --> 00:07:59,080
Speaker 5: How flexible do you need to be after the election.

205
00:07:59,160 --> 00:08:01,200
Speaker 5: I'm thinking of corp tax rates. That's going to be

206
00:08:01,200 --> 00:08:02,960
Speaker 5: a huge debate, as well as Tariff's.

207
00:08:03,160 --> 00:08:05,320
Speaker 4: Yeah, so Tarriff's is the one that's easier because it

208
00:08:05,360 --> 00:08:08,640
Speaker 4: doesn't need congressional support. I think the baseline view from

209
00:08:08,640 --> 00:08:10,560
Speaker 4: most clients we speak to in our house view is

210
00:08:10,640 --> 00:08:13,160
Speaker 4: that probably the most consensus thing is that we're going

211
00:08:13,200 --> 00:08:15,440
Speaker 4: to have gridlock in Congress. Right, it's going to be

212
00:08:15,600 --> 00:08:18,240
Speaker 4: hard for one party to get a full sweep. So

213
00:08:18,520 --> 00:08:20,640
Speaker 4: if that happens, then taxes is kind of off the

214
00:08:20,640 --> 00:08:23,280
Speaker 4: table for higher taxes. You can maybe see an extension

215
00:08:23,280 --> 00:08:26,160
Speaker 4: of the tax cuts from twenty seventeen, So that's possible

216
00:08:26,200 --> 00:08:29,800
Speaker 4: with congressional gridlock. The tariffs, though, can be enacted at

217
00:08:29,800 --> 00:08:32,440
Speaker 4: the presidential level. So obviously in the Trump scenario, that's

218
00:08:32,480 --> 00:08:35,480
Speaker 4: probably a worst scenario than it is with Harris. But

219
00:08:35,559 --> 00:08:38,000
Speaker 4: I do think both administrations have shown their hand on that.

220
00:08:38,080 --> 00:08:40,920
Speaker 4: I don't think tariffs are going away if Harris gets elected.

221
00:08:40,960 --> 00:08:42,520
Speaker 4: I mean, I think the penchant there will be to

222
00:08:42,600 --> 00:08:44,960
Speaker 4: kind of continue what the Biden Harris regime has done

223
00:08:44,960 --> 00:08:45,800
Speaker 4: for the last four years.

224
00:08:45,840 --> 00:08:47,880
Speaker 5: Do you buy into this narrative that maybe Kamala Harris

225
00:08:47,960 --> 00:08:50,960
Speaker 5: is good for the bond market the way Donald Trump

226
00:08:51,080 --> 00:08:52,320
Speaker 5: might be good for the shock market.

227
00:08:52,559 --> 00:08:54,599
Speaker 4: That's the way we've been talking about it for the

228
00:08:54,640 --> 00:08:57,280
Speaker 4: last several months is that Trump is probably not as

229
00:08:57,280 --> 00:09:00,480
Speaker 4: favorable for the bomb market because he's more of an inflationist. Tariffs,

230
00:09:00,520 --> 00:09:02,920
Speaker 4: of course, are part of that story, but also he

231
00:09:02,960 --> 00:09:05,720
Speaker 4: wants to cut taxes, but the stock market may like

232
00:09:05,760 --> 00:09:06,160
Speaker 4: that more.

233
00:09:06,480 --> 00:09:08,800
Speaker 3: Okay, And if you get a blue sweep, that's.

234
00:09:08,600 --> 00:09:11,520
Speaker 4: Probably the worst case scenario for stocks, because then the

235
00:09:11,640 --> 00:09:13,720
Speaker 4: risk of tax becomes legitimate.

236
00:09:14,000 --> 00:09:15,839
Speaker 2: How difficult is it It's come over with an index

237
00:09:15,920 --> 00:09:17,760
Speaker 2: level call for twelve months time.

238
00:09:18,320 --> 00:09:20,280
Speaker 4: Well, it's always difficult. I mean, I would say in

239
00:09:20,320 --> 00:09:22,360
Speaker 4: the late We've said this for a long time. I mean,

240
00:09:22,760 --> 00:09:25,160
Speaker 4: this is the most difficult part of the cycle if

241
00:09:25,160 --> 00:09:27,320
Speaker 4: you're true to your work. I mean, the late cycles

242
00:09:27,320 --> 00:09:29,760
Speaker 4: are always, like we were just talking about, the market

243
00:09:30,320 --> 00:09:33,880
Speaker 4: starts to rotate around because the opportunity, said, is less

244
00:09:34,120 --> 00:09:36,480
Speaker 4: when you get into the later part of an economic expansion.

245
00:09:36,960 --> 00:09:38,880
Speaker 3: So I mean twelve months is difficult.

246
00:09:39,000 --> 00:09:41,000
Speaker 4: I would say the easiest time to frame is seven

247
00:09:41,080 --> 00:09:43,240
Speaker 4: years and We've talked about this before too, right, I mean,

248
00:09:43,640 --> 00:09:45,840
Speaker 4: the only thing that you have over seven years is valuation,

249
00:09:46,280 --> 00:09:49,040
Speaker 4: and that's what we keep harping on value. Valuations are expensive. Okay,

250
00:09:49,080 --> 00:09:50,520
Speaker 4: I don't care how you shake it. I'm not in

251
00:09:50,520 --> 00:09:53,080
Speaker 4: this camp that, oh it's different this time. So if

252
00:09:53,120 --> 00:09:55,520
Speaker 4: you're investing right now, you have to be with the

253
00:09:55,559 --> 00:09:58,559
Speaker 4: mindset that you're probably not buying and holding for seven.

254
00:09:58,360 --> 00:09:59,440
Speaker 3: Years at these prices.

255
00:09:59,520 --> 00:10:02,000
Speaker 4: Right, You're going to have to be moving around across sectors,

256
00:10:02,040 --> 00:10:05,439
Speaker 4: across individual themes. And we've also been very focused on stockpicking.

257
00:10:05,480 --> 00:10:08,719
Speaker 4: There's there's always stocks that work. And that's why I think,

258
00:10:08,760 --> 00:10:09,800
Speaker 4: you know now the focus.

259
00:10:09,640 --> 00:10:11,600
Speaker 3: On the CPI. I'm not that focused on the CPI today.

260
00:10:11,840 --> 00:10:13,440
Speaker 2: I mean to be true that something we asked you about,

261
00:10:13,440 --> 00:10:16,680
Speaker 2: it's be honest, because I just think that's news in

262
00:10:16,760 --> 00:10:19,360
Speaker 2: any ways, unless it's a point for or higher, I

263
00:10:19,360 --> 00:10:20,920
Speaker 2: think it's going to be a non event for the

264
00:10:20,960 --> 00:10:21,439
Speaker 2: most part.

265
00:10:21,600 --> 00:10:23,400
Speaker 4: What's focused now for the market is going to be

266
00:10:23,400 --> 00:10:26,800
Speaker 4: earning season right, and so idiosyncratic opportunities for clients. That's

267
00:10:26,800 --> 00:10:29,280
Speaker 4: how they've been focused. Institutional clients, that's where they've been focused.

268
00:10:29,280 --> 00:10:31,320
Speaker 4: That's where they should be focused and it's a great

269
00:10:31,360 --> 00:10:32,480
Speaker 4: stock picking market right now.

270
00:10:32,480 --> 00:10:34,760
Speaker 2: So we'll share a single night any account.

271
00:10:34,800 --> 00:10:35,840
Speaker 3: Can you describe it well?

272
00:10:35,880 --> 00:10:38,240
Speaker 4: I would say the way I would describe it is

273
00:10:38,400 --> 00:10:40,080
Speaker 4: that the factors that are really continuing to work are

274
00:10:40,160 --> 00:10:43,080
Speaker 4: quality and earnings revision breadth or earningge revisions you know

275
00:10:43,080 --> 00:10:45,320
Speaker 4: to the upside, so three month EARNAE visions and that's

276
00:10:45,320 --> 00:10:46,040
Speaker 4: how we're positioned.

277
00:10:46,040 --> 00:10:47,360
Speaker 3: That's the quality cyclcal trade.

278
00:10:47,360 --> 00:10:49,520
Speaker 4: That's where the range of visions have are now in

279
00:10:49,559 --> 00:10:51,080
Speaker 4: the in the in the better mode. I would say

280
00:10:51,080 --> 00:10:53,160
Speaker 4: some of the gross stocks, the big large cab grows stocks,

281
00:10:53,360 --> 00:10:56,080
Speaker 4: their revision factors are starting to fade, right because they

282
00:10:56,120 --> 00:10:57,080
Speaker 4: just got too extended.

283
00:10:57,360 --> 00:10:58,000
Speaker 3: So that's the key.

284
00:10:58,000 --> 00:11:00,440
Speaker 4: You got to focus on good is good, right, Bad

285
00:11:00,520 --> 00:11:02,640
Speaker 4: is bad, and that's that's the main thing is there's

286
00:11:02,679 --> 00:11:05,120
Speaker 4: no more of this bad is good that I think

287
00:11:05,160 --> 00:11:06,000
Speaker 4: that party is over.

288
00:11:06,080 --> 00:11:08,040
Speaker 2: We're happy to leave that party behind. Mike's going to

289
00:11:08,040 --> 00:11:10,400
Speaker 2: see it, thank you, Sir, Michael Wilson of Milk and

290
00:11:10,440 --> 00:11:10,800
Speaker 2: Stanley