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Speaker 2: Earning seemed to be coming in pretty solid. Is it
Speaker 2: enough to support this market? Lori Cavacina joins us. She's
Speaker 2: had a US equity strategy at RBC Capital Market.
Speaker 3: She's usually on the road.
Speaker 2: When she's back in New York week Reverence see if
Speaker 2: she can come into the studio, and we appreciate that. Y.
Speaker 2: What are the conversations you're having with your clients these
Speaker 2: days as you do travel around to see them.
Speaker 4: Everyone's nervous, everyone's jittery. I wouldn't say that people are
Speaker 4: super bearish, you know. And maybe one good example is
Speaker 4: I was in London a few weeks back, and I'd
Speaker 4: been there in December, and in December everyone was parish.
Speaker 4: This time it was more wary, cautious concern. I got
Speaker 4: back to the States and started running around a whole
Speaker 4: bunch of different cities, same kind of vibe.
Speaker 5: So jittery, of course, there's a lot of uncertainty, so
Speaker 5: I want to dig into why, what's driving this jittery
Speaker 5: ness from them. I mean, of course, we have the
Speaker 5: SP five hundred up about fifteen percent year today, looking
Speaker 5: at the VIS index hanging around the sixteen handle right now,
Speaker 5: Where are people feeling? Why are they feeling this?
Speaker 4: So I think valuations are at the end of the day.
Speaker 4: The one thing I hear in just about every meeting,
Speaker 4: and what we see in our own data, is that
Speaker 4: we're not at tech bubble extreme. So I know there's
Speaker 4: lots of talk of a bubble, but we are. Whether
Speaker 4: you're looking at SMP top ten names, SMP market cap
Speaker 4: weighted NASDAQ one hundred, kind of the workhorses of the
Speaker 4: market from the earnings perspective, they're bumping up against the
Speaker 4: ceilings of kind of the pre and post COVID era
Speaker 4: and they're not breaking through. We haven't seen any expansion
Speaker 4: on the PE multiples if you look broadly across the
Speaker 4: indexes since August. So I think people are feeling that.
Speaker 4: You know, some clients who have been really bullish on
Speaker 4: CAPEX back in the summer, saying like it's just not
Speaker 4: quite as strong as we thought.
Speaker 6: It would be.
Speaker 4: You know, I've had a number of conversations on rate cuts,
Speaker 4: and we were really hearing a lot about that in
Speaker 4: June and July, and now I've had some people say
Speaker 4: to me, well, yeah, rate cuts are bullish, but we
Speaker 4: already pulled all that forward. So I think it's a
Speaker 4: sense of you know, valuation whiplash. And then of course,
Speaker 4: you know, the AI of related stocks are doing well now,
Speaker 4: but they have had some difficult days and there's been
Speaker 4: a lot of jitteriness on those not from people who
Speaker 4: are bearish on the theme, people who have bought into
Speaker 4: the theme but have seen how far it's run and
Speaker 4: now concerned it's hitting some speed bumps.
Speaker 2: Do you think earnings are going to be strong enough
Speaker 2: this quarter? And then the guidance into the to the
Speaker 2: last couple months of the year then into next year,
Speaker 2: are earnings gonna be enough for this market?
Speaker 4: So I think earnings are a solid foundation, but I
Speaker 4: think the sentiment around earnings has also gotten overdone.
Speaker 6: And what I mean by that.
Speaker 4: Is if you look at the rate of upward revisions,
Speaker 4: it hit twenty eight percent for the S and P
Speaker 4: five hundred in late April. That's typical of a trough
Speaker 4: and a decline outside of a big crisis. Fast forward
Speaker 4: to mid August, we had rallied into the mid sixties
Speaker 4: on that stat, and that's about as good as it
Speaker 4: gets if you're not recovering off a big crisis. And
Speaker 4: now that stat has been decelerating, and it was I
Speaker 4: think abound fifty two percent in our update we took
Speaker 4: late last week, so you're not quite a negative revision territory.
Speaker 4: We're seeing basically every sector to clerate except tech, which
Speaker 4: is kind of stalled around all time highs. So the
Speaker 4: big question is is tech going to join the rest
Speaker 4: of the crowd and start to decelerate or is it
Speaker 4: just going to stick around at all time highs. The
Speaker 4: only sort of industry or sector I can really remember
Speaker 4: staying at all time highs for an extended period of
Speaker 4: time was home building pregfc Ah.
Speaker 5: Yeah, I used to cover homebuilders for your Equity scene,
Speaker 5: and it's interesting to watch the rally that we saw there.
Speaker 7: But I want to dig back into tech.
Speaker 5: As we've been spelling out here, We're going to hear
Speaker 5: from a lot of the big names this week. The
Speaker 5: conversation has really been in are we in a tech bubble.
Speaker 7: What do you make of that?
Speaker 6: So, you know, I started in two thousand.
Speaker 4: I literally got my job in March of two thousand
Speaker 4: when they were out they were giving out finance jobs
Speaker 4: to polysym majors. But you know, I saw the implosion.
Speaker 4: I didn't see the build up. But what I see
Speaker 4: in my data today, again, the valuations are not back
Speaker 4: to where they were at that point in time. Yes,
Speaker 4: they're extended. They're also extended for the rest of the market,
Speaker 4: So I don't think it. I think it's a broader
Speaker 4: valuation problem. We have some charts where we look at
Speaker 4: net income share of the top ten market cap names
Speaker 4: against the market.
Speaker 6: Cap share, and there is a gap. But there has
Speaker 6: been a.
Speaker 4: Gap where kind of the market cap share has exceeded
Speaker 4: the net income share, you know, for you know, the
Speaker 4: better part of the past decade. I think there's more
Speaker 4: earning support to this trade than there was in the past.
Speaker 4: Is it maybe a little too exuberant? Probably?
Speaker 6: But is it a bubble? I don't think so.
Speaker 2: So what sectors or factors are screening well for you now?
Speaker 2: I'm guessing it's kind of few and far between, given
Speaker 2: how the lift we had.
Speaker 4: Yeah, I mean, anything AI related looks expensive, so that's
Speaker 4: going to be industrials utilities, you know.
Speaker 6: And also the tech sector.
Speaker 4: Had been looking more neutral on our models, but now
Speaker 4: it's looking elevated again. Consumer discretionary also looks expensive. That's
Speaker 4: our one underweight sector. We're neutral those others I mentioned.
Speaker 6: We're still overweight.
Speaker 4: Financial is definitely more nervous in the in the wake
Speaker 4: of sort of the private credit issues, but our bank's
Speaker 4: analysts have thought that pain was overdone, so we're sticking
Speaker 4: with that.
Speaker 6: Overweight.
Speaker 4: Materials we've liked, and then we haven't upgraded the healthcare sector,
Speaker 4: but we have written in some of our weeklies that
Speaker 4: on a tactical basis, if you're worried about a pullback
Speaker 4: in the market, which we are, it looks like the
Speaker 4: best defensive option. We've generally been market weight the defensive sectors.
Speaker 4: But we've got nice flows, nice valuations, good earnings revision
Speaker 4: trends that are decelerating but are not as decelerating as
Speaker 4: much as say industrials and materials. Got policy risk, but
Speaker 4: maybe the worst of that's behind us.
Speaker 7: So moving and learn into the macro.
Speaker 5: What did you take away from the Ladist CPI report,
Speaker 5: especially given the fact that we have the SPED meeting
Speaker 5: coming up on Wednesday, well get it.
Speaker 4: So you know, what our economists have said was they
Speaker 4: were not so worried about, you know, kind of this
Speaker 4: inflation report right that, you know, they thought this was
Speaker 4: going to be a pretty reliable report.
Speaker 6: They also said that you got a lot of help.
Speaker 4: From owner's equivalent rent and they don't expect that to
Speaker 4: continue that sort of the pressures on goods are you know,
Speaker 4: on goods pricing is persisting. They're seeing some pressure on services.
Speaker 4: So they're still worried about inflation and core terms hitting
Speaker 4: about three and a half percent in the middle of
Speaker 4: next year. Our rates team has said we get the
Speaker 4: cut this week, but they think there's a pause in December.
Speaker 4: They think we get two more cuts next year. But
Speaker 4: I would say as a house view, I think RBC
Speaker 4: has been a little bit more concerned about inflation and
Speaker 4: it's reverberations on the FED than maybe some other shops.
Speaker 2: Laurie, as you know as well as anybody, a good
Speaker 2: solid bull market needs some healthy pullbacks from time to
Speaker 2: time for some sustainable period of time. We haven't really
Speaker 2: had that in this market.
Speaker 6: We haven't I think the worst we got.
Speaker 4: You know, we've had some big rumblings in some of
Speaker 4: the tech names. We've had the momentum trade breakdown, you know,
Speaker 4: briefly in both the Russell and the SMP. You know
Speaker 4: it has been enough damage. You've also seen the gyrations
Speaker 4: and gold retail passive flows are starting to deteriorate. I
Speaker 4: see a lot of signs of fatigues and that things
Speaker 4: are not necessarily completely healthy under the surface. We've been
Speaker 4: looking for a five to ten percent draw down. If
Speaker 4: it gets postponed, we don't think that it's derailed that pullback.
Speaker 4: It's possible it's going to get delayed, but I think
Speaker 4: at these valuation levels it's inevitable.
Speaker 5: So some people have been talking a lot about market froth.
Speaker 5: The you're here, how much further do you see equities rallying?
Speaker 5: I mean, it has been a really relentless year, especially
Speaker 5: if you think about two years previously, we were seeing
Speaker 5: more than twenty percent returns on the S and P
Speaker 5: five hundred, and going into this year, there was a
Speaker 5: conversation about whether or not we might not even reach
Speaker 5: close to that, But here we are sitting at fifteen
Speaker 5: percent gain on the year.
Speaker 4: I think We're going to have to, you know, keep
Speaker 4: a very close eye on the technicals. And here my
Speaker 4: year end target is actually below where we are now.
Speaker 4: We do have a second half of twenty twenty six
Speaker 4: target up around seventy one hundred, and some of our modeling,
Speaker 4: frankly can get you seventy four seventy five hundred. That's
Speaker 4: our sentiment and cross asset work, which were the most
Speaker 4: bullish models for this year. So you know, I think
Speaker 4: that you can only really get there if you have
Speaker 4: the pause that refreshes.
Speaker 6: But we'll see how it goes.
Speaker 2: Laurie, thank you so much for joining us. We always
Speaker 2: appreciate getting a few minutes of your time.
Speaker 3: You know how busy you are.
Speaker 2: Lori Cavacina, she's head of US Equity strategy at RBC
Speaker 2: Capital Markets.
Speaker 3: To stay with us from Bloomberg Surveillance. Coming up after this.
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
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Speaker 1: Just Say Alexa, Play Bloomberg eleven thirty with the President
Speaker 1: in Asia.
Speaker 2: It kind of feels like that's where the focus is
Speaker 2: right everyone you know in Washington. And maybe that's a
Speaker 2: good thing because Washington still closed. You're not pretty quiet,
Speaker 2: they're not open for business. And we were down there
Speaker 2: a couple of weeks ago for a remote broadcast and boy,
Speaker 2: you can go to any monument outside you know, you know,
Speaker 2: the Lincoln Memorial my favorite.
Speaker 3: Not a lot of people there, not a lot of tours.
Speaker 2: I mean, it's just and the buses are not going around,
Speaker 2: parking spots available.
Speaker 3: On the street.
Speaker 7: A little different, a little.
Speaker 3: Bit different there.
Speaker 2: Henrietta trust Jads is here, co founder managing partner of
Speaker 2: Veda Partners, Henriette. As we go into week I don't
Speaker 2: know four here coming up for this closure. What's the
Speaker 2: feeling in DC these days? Is this a is this
Speaker 2: good for anybody? Is there lasting damage for anybody? Or
Speaker 2: is just nobody really paying attention here?
Speaker 8: It's really kind of a surreal, suspended animation kind of
Speaker 8: place right now. The House Republican Conference is not even
Speaker 8: in session, so they're not in DC. So the temperature
Speaker 8: on the Republican side, from my perspective, is a lot
Speaker 8: more calm.
Speaker 7: They just are you.
Speaker 8: Know, the president doesn't care about this or voters don't
Speaker 8: care about this, so therefore we don't care about this.
Speaker 7: And then on the Democratic side, there's a little bit
Speaker 7: more action.
Speaker 8: A keem Jeffries is calling the entire Democratic Conference back
Speaker 8: to DC this week, so they will be there, they'll
Speaker 8: be press briefings, they'll be talking about the ACA subsidies,
Speaker 8: and they'll be trying to generate some sort of momentum
Speaker 8: in one direction or another. But as you just pointed out,
Speaker 8: as long as the president is not engaged, there's not
Speaker 8: going to be any forward progress. So the government will
Speaker 8: should be shut down for at least another probably ten
Speaker 8: days at a minimum.
Speaker 5: So are there any sort of long term consequences that
Speaker 5: you should expect coming out of a government shutdown? Of course,
Speaker 5: this is the second longest, the longest government shut down
Speaker 5: being about thirty five days.
Speaker 8: Right, Not even is there a long term impact in
Speaker 8: terms of just what the government can do. They'll all
Speaker 8: get back up and running and the same employees will
Speaker 8: still be there. All these firings that russ Bott has
Speaker 8: done will be overruled by the legal courts, as has
Speaker 8: been the case in Stone Started and we'll get back
Speaker 8: to business. And there's not even really an impact from
Speaker 8: the voter's perspective. When they have shut down in the past,
Speaker 8: Republicans haven't paid a price for it in elections. The
Speaker 8: next cycle, it's it's a full year away from the
Speaker 8: twenty twenty six midterms, so voters are going to forget
Speaker 8: about this. Move on, we'll reopen. The one thing we
Speaker 8: don't want is a rolling stream of shutdowns. So hopefully
Speaker 8: they'll reach a deal to reopen and then they'll keep
Speaker 8: it open for at least a year, for six or
Speaker 8: seven months.
Speaker 2: All right, all right, let's leave that word is. We've
Speaker 2: got I live in the state of New Jersey. We
Speaker 2: have a governor's election there. I did my early voting
Speaker 2: this weekend. There's one also in Virginia. How are the
Speaker 2: How's the Democratic Party, how's the Republican Party?
Speaker 3: Looking at those two states, you know, I think.
Speaker 8: It's interesting to have a conversation about those elections in
Speaker 8: the context of the shutdown, because one party or the
Speaker 8: other could generate some momentum based off of what happens on.
Speaker 7: The Tuesday election.
Speaker 8: So if Democrats pick up both races in Virginia and
Speaker 8: New Jersey, which is what the polling is currently suggesting.
Speaker 8: I think Dems are head by five in Jersey and
Speaker 8: by twelve in Virginia. Then you'll see at least a
Speaker 8: media narrative or you know, a talking point for the
Speaker 8: Democratic Party. The voters are turning away from Trump, they're
Speaker 8: turning towards the Democratic Party, and if it goes to
Speaker 8: the other direction, the reverse and it would probably be
Speaker 8: even more extreme for the Republican since that's not consensus
Speaker 8: and expectations from the polls.
Speaker 7: So I think it could generate some.
Speaker 8: Momentum right when Trump is returning to d C, right
Speaker 8: as we're heading into what should be a Veterans Day
Speaker 8: recess starting on Friday, November seventh, and that could move
Speaker 8: some things around on the shutdown front.
Speaker 7: Where are your eyes most fixed story?
Speaker 4: Now?
Speaker 7: Are any of these races expected to be close? Not really.
Speaker 8: I think that, you know, we constantly see New Jersey
Speaker 8: as the great white whale for the Republican Party, So
Speaker 8: there's a possibility of some sort of movement there. People
Speaker 8: will be looking at margins, but pretty much we're expecting
Speaker 8: a Democratic win in Jersey. In Virginia, it should be.
Speaker 7: A sort of blockbuster year four.
Speaker 8: Democrats as the minority party going into twenty twenty six,
Speaker 8: So there's Supreme court cases and judges elections in Pennsylvania,
Speaker 8: fifty in California. There's a lot of things to watch,
Speaker 8: but it should all generally go in the Democrats' direction,
Speaker 8: as it would in the reverse if Democrats controlled everything
Speaker 8: right now. So not expecting anything major to come out
Speaker 8: except for that potential momentum play and media narrative to
Speaker 8: come out of this.
Speaker 3: Henrietta, I can give you some local color here.
Speaker 2: Being in the Greater New York, New Jersey metro market,
Speaker 2: we were just getting crushed with TV political ads. It's
Speaker 2: just brutal what mister Cindarelli, the Republican candidate for governor,
Speaker 2: is not doing. He is not running on the cotails
Speaker 2: of President Trump. He's not invoking Trump and trump Ism
Speaker 2: and magat at all. Does that surprise you or what
Speaker 2: does that tell you?
Speaker 8: Well, voters tend to vote in sort of a swing.
Speaker 8: They go in one direction one year, and then they
Speaker 8: decide they don't like what they just did and they
Speaker 8: go backwards, Especially when one administration is being really proactive.
Speaker 8: We're really active, passing a lot of legislation very much
Speaker 8: in the news all the time.
Speaker 7: Voter send a not like that.
Speaker 8: So it makes a lot of sense for Republicans, especially
Speaker 8: a state like New Jersey, to run away from MAGA,
Speaker 8: to run away from Trump, because Trump's approve all rating,
Speaker 8: especially on his core issue of the economy and inflation,
Speaker 8: is seriously underwater. I believe the worst he's had in
Speaker 8: both of his terms is standing with voters on the
Speaker 8: economy and inflation.
Speaker 7: And that's, of course due to the tariffs. Voters don't like.
Speaker 8: The one big, beautiful bell, so I'd be running away
Speaker 8: from it too.
Speaker 2: All right, We'll see Henrietta Trees, co founder managing partner
Speaker 2: Vida Partners, to stay with us from Bloomberg Surveillance coming
Speaker 2: up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Coarclay, and Android
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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 2: We continue to face a dearth of economic data with
Speaker 2: the government shut down here. We did get some CPI
Speaker 2: data last week you know, a little bit higher than
Speaker 2: I think the Fed wants to see it, stubbornly a
Speaker 2: little bit higher than where they want to see it.
Speaker 3: So what does that mean for our Freder Reserve.
Speaker 2: Let's check in with David Rosenberg, he's founder and president
Speaker 2: Rosenberg Research and Associates. And David, we actually did get
Speaker 2: a piece of government inflation data last week. I love
Speaker 2: to get your thoughts on it here and how you
Speaker 2: think the inflation outlok may influence how our Freder Reserve
Speaker 2: looks at the interest rate scenario.
Speaker 9: Well, as far as the CPR reports concerned that came
Speaker 9: out on Friday, it's really not a case of inflation
Speaker 9: still being above the Fed's target. The Fed can't be
Speaker 9: focused on lagging indicator. It has to before focused on
Speaker 9: where inflation is going to be a year from now
Speaker 9: and two years from now, because it's policy moves influenced
Speaker 9: the economy and with a lag. So when I hear
Speaker 9: well inflation is still well above the Fed's target, my
Speaker 9: eyes just rolled. It's really a meaningless comment.
Speaker 3: It's where instlation is going right.
Speaker 9: Well, if the Fed rolls that way, then they wouldn't
Speaker 9: be nudging the market towards a view that they're going
Speaker 9: to be cutting this week and probably cutting one more
Speaker 9: time between now and the end of the year. So
Speaker 9: I think that the bottom line is that when you
Speaker 9: look at Friday's number standalone, the headline in the core
Speaker 9: came infractionally below expected. And we're finally starting to get
Speaker 9: some help out of the dominant rent and OEER metrics,
Speaker 9: which have lagged well behind the actual deflation that we've
Speaker 9: seen in residential rents in real time. But there are
Speaker 9: inherent lags that are built in. And the other part
Speaker 9: of this is that you know, when you're taking a
Speaker 9: look at the core good CPI, you know it's no
Speaker 9: longer deflating, it's inflating. But the terraff impact so far
Speaker 9: in the good sector has actually been fairly mild. If
Speaker 9: I was it the FED, I'd be encouraged by that.
Speaker 5: So how exactly are you expecting them to interpret this?
Speaker 5: I mean, of course, all eyes are on this upcoming meeting,
Speaker 5: and in the midst of the fact that we do
Speaker 5: have a major absence of data here.
Speaker 9: Well as it comes to, you know, the inflation side,
Speaker 9: you know what the FED should really be consumed with
Speaker 9: is where inflation expectations are, and when you look at
Speaker 9: the broad array of inflation expectation metrics, they're running at
Speaker 9: the oh my lord, two point three percent. We look
Speaker 9: at five year and ten year tips break evens, they're
Speaker 9: not that far ahead of where the feds the facto
Speaker 9: target is. And yet the FED funds rate is at
Speaker 9: least one hundred basis points above neutral. So that's ry
Speaker 9: line up. And of course the Fed's got a duel
Speaker 9: Man date, not a single mandate. And the labor market
Speaker 9: is showing signs of cracking. There's no doubt that the
Speaker 9: firing rate is low, you know, heading into the government shutdown,
Speaker 9: looking at initial job as claims they weren't really doing
Speaker 9: anything more than just stabilizing. So companies are still hoarding labor.
Speaker 9: But the problem is that the hiring rate has you know,
Speaker 9: fallen dramatically and to a point now where employment is contracting.
Speaker 9: We don't have the nonfim pyial numbers, but we have
Speaker 9: the ADP private sector employment numbers, and they've declined in
Speaker 9: two of the past three months, so we're building up
Speaker 9: slacking the labor market. Cracks are emerging. They can't ignore that.
Speaker 9: At the same time, you could argue that inflation has
Speaker 9: been stubborn.
Speaker 3: But you know, there was a.
Speaker 9: Time when inflation was nine percent, you know, back in
Speaker 9: twenty twenty two, and people were saying we'll never see
Speaker 9: three percent again, let alone getting to two percent. Well
Speaker 9: we're at three percent, So I would still say the
Speaker 9: trend is down when I hear about sticky sticky sticky,
Speaker 9: the overall trend is still towards disinflation. I think we've
Speaker 9: got to be amazed that we're still roughly around three
Speaker 9: percent even with the tariff impact. And if we get
Speaker 9: some more news out of residential rents, which I think
Speaker 9: are going to be this disinflating further. And remember that's
Speaker 9: the dominant force. You know, the teriff impact on the
Speaker 9: good side, is really a small share of the CPI.
Speaker 9: We continue to see the rental disinflation in the CPI
Speaker 9: DA that people will be surprised by this time next
Speaker 9: year how low it's going to be.
Speaker 2: So follow up on that, David, because this is a
Speaker 2: market that we've been told for years and years and years,
Speaker 2: the housing market. We have a housing shortage, and rents
Speaker 2: been reflected in rents and the high cost of housing
Speaker 2: and the housing affordabilities just out of reach for so
Speaker 2: many consumers out there. Talk to us about the real
Speaker 2: estate market, and how do you think that may impact
Speaker 2: the economy?
Speaker 9: Well, Housing affordability has begun to improve, actually because of
Speaker 9: two factors. One, of course, is the bond induced mortgage
Speaker 9: market reliefs that we've seen, but are also coming off
Speaker 9: five consecutive months of home price deflation. And the gold
Speaker 9: standard for home prices quality adjusted is the case Shiller
Speaker 9: Home Price Index. It's down five months in a row.
Speaker 9: That's not a blip on the screen. That is a pattern.
Speaker 9: So you know, when I hear about that there's a
Speaker 9: supply shortage of housing, how do you explain that in
Speaker 9: the context of five straight months of negative readings on
Speaker 9: the case Shiller Home Price Index. The problem is that
Speaker 9: demand has fallen below what you can argue is a
Speaker 9: tight supply. You can only get negative pricing in anything
Speaker 9: if demand is faltering relative to the supply curve, no
Speaker 9: matter what that supply curve looks like. And so the
Speaker 9: other part of this equation, of course, that nobody looks
Speaker 9: that because we talk about the stock market all the
Speaker 9: time being underpinned by you know, ten percent growth and
Speaker 9: corporate profits, is that is that personal incomes are actually deflating.
Speaker 9: We have this unusual circumstance because of the equity wealth
Speaker 9: effect on spending. That consumer spending in real terms since
Speaker 9: April is up two point six percent at an annual
Speaker 9: rate against the backdrop of negative one point two percent
Speaker 9: in real disposable income. So the problem even though affordability
Speaker 9: has begun to improve at the margin, remember that the
Speaker 9: denominator is income. And because the stock market, the labor
Speaker 9: market is showing cracks, personal incomes are starting to actually
Speaker 9: contract in real terms. And if I'm sitting at the FED,
Speaker 9: that that is that's an alarm bell because personal incomes
Speaker 9: represents seventy percent of total labor income and drives seventy
Speaker 9: percent of the economy ultimately, which is the con The
Speaker 9: question is how long can the energizer bunny last because
Speaker 9: of the equity wealth effect of declining savings rates when
Speaker 9: personal income in real terms is contracting. You know when
Speaker 9: I mentioned that negative one point two percent trended in
Speaker 9: real personal supposed to incomes since April. Nobody believes me
Speaker 9: until I show them the data. And you know you're
Speaker 9: talking before about are we heading into recession? Wellg news
Speaker 9: for you when it comes to real personal incomes. Not profits,
Speaker 9: mind you, but real personal supposed to income already is
Speaker 9: in a recession.
Speaker 5: Well, David, you did mention markets here, and of course
Speaker 5: we know markets closed at a record high last week.
Speaker 5: When we look at the equity market, even with all
Speaker 5: the disruptions of the year, whether it be geopolitical tensions, terrorffs,
Speaker 5: inflation concerns, we're still seeing markets rallying here. How far
Speaker 5: do you expect this rally to continue? Is the optimism
Speaker 5: already baked in?
Speaker 9: Well, I've been saying that for a while. But you know,
Speaker 9: as Bob Ferrell, my hero and mentor famously posited, exponentially
Speaker 9: rising markets can go further than you think, but they
Speaker 9: don't correct by going sideways. And we are in the
Speaker 9: further than you think zone of the stock market. So
Speaker 9: I think we're an extra innings. But you know, only
Speaker 9: a brazen full would say to you that you know
Speaker 9: this is going to end, you know, tomorrow, next week
Speaker 9: or next month. The momentum and the sentiment is just
Speaker 9: overwhelmingly strong. You know, I was saying these same things
Speaker 9: back in nineteen ninety nine. The market didn't peak until,
Speaker 9: you know, March two thousand, So could it go even
Speaker 9: further than we think? Absolutely, We're we're in a two
Speaker 9: stand aviation event when it comes to the multiples in
Speaker 9: the stock market, and we've been there for several months now.
Speaker 9: But you know, bubbles can typically last, I mean on average,
Speaker 9: when you talk about what is a bubble, A bubble
Speaker 9: is anything north of two cent reviations above the historical norm.
Speaker 9: And we've been there for some time, but you can
Speaker 9: actually be there for you know, eighteen to twenty four months.
Speaker 9: So the clock is ticking. But I'm not going to
Speaker 9: tell you that it can't go on further over the
Speaker 9: here tournament. It probably will.
Speaker 2: David, thanks so much for joining us. Always appreciate getting
Speaker 2: a few minutes of your time.
Speaker 3: David Rosenberg.
Speaker 2: He's a founder and president of Rosenberg Research and associate to.
Speaker 7: Do this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Let's check came Alis mttail and see what she's got
Speaker 2: with her newspaper segment.
Speaker 10: All right, I thought of this one with you, Paul, Okay.
Speaker 10: I know you're a Landman fan.
Speaker 3: Okay, So a Yellowstone.
Speaker 11: And yellow exactly.
Speaker 10: So it's the guy behind it, right, Taylor Sheridan, So
Speaker 10: the Wall Street Journal sources are telling them.
Speaker 11: Also Tulsa King too. That's another one.
Speaker 10: He signed a deal to join NBC Universal when his
Speaker 10: contract with Paramount expires in twenty twenty nine. And this
Speaker 10: is a huge deal because he's one of the biggest
Speaker 10: providers of shows at paramounth Plust. So the difference at
Speaker 10: NBC Universal. They're saying he's going to create films for
Speaker 10: the movie studio Universal Pictures in addition to the TV
Speaker 10: content for NBC and the Peacock streaming. But the timing
Speaker 10: of it, I mean, think about it. It comes less
Speaker 10: than three months after David Ellison's sky Dance acquired control,
Speaker 10: and Ellison was saying that, you know, he wanted to
Speaker 10: keep Sheridan on board. So this is like some interesting
Speaker 10: news behind Yeah, all the.
Speaker 2: Really tapped into a vein of kind of programming that
Speaker 2: some people like to really see and like the and
Speaker 2: play it up.
Speaker 3: And he's pretty done good at it.
Speaker 1: You know what.
Speaker 2: It's interesting he said he was an actor and he
Speaker 2: was tired. I think his term was I was tired
Speaker 2: being on the fifth page of the call list right
Speaker 2: for actors, and so I just said, I'm gonna start
Speaker 2: writing my own stuff and producing my own stuff.
Speaker 3: And that's and now which created this empire?
Speaker 6: Really are?
Speaker 7: I've never seen you aloseing I have.
Speaker 11: I've seen either of them. I hope Tulsa King was
Speaker 11: pretty good.
Speaker 2: Is another one that that he does. So he's just
Speaker 2: he's on a crazy hot streak. It's a great win
Speaker 2: for NBC Universal and it's a big, big loss for
Speaker 2: paramunt because Paramount Plus has really relied heavily on his
Speaker 2: programming to kind of launch that Paramount Plus. So that's
Speaker 2: a that's a big loss.
Speaker 10: It is definitely Okay, So Halloween season, right, we got
Speaker 10: fall fever in the air. We're talking pumpkin lattes, right,
Speaker 10: apple picking, love it, love it. But some people are
Speaker 10: going all in. They're paying stylists hundreds, sometimes thousands of
Speaker 10: dollars to decorate their porches. Okay, wow, I just put
Speaker 10: a reef on my door and I call it today,
Speaker 10: like with a scarecrow and that's it. But these people,
Speaker 10: and what the Wall Street Journal is saying, which is interesting,
Speaker 10: is that they're like Insta porches, right, because it's all
Speaker 10: about the Instagram and what you post, and if you're
Speaker 10: having family over, you have to impress. So it's sparking
Speaker 10: this like micro economy, the senior little micro economy for
Speaker 10: the season where people are paying a lot of money.
Speaker 10: So they have like jack O lanterns, corn stock moms,
Speaker 10: Halloween decorations, all this on their porches, some of them.
Speaker 10: There's one company, it's actually called Porch Pumpkins in Texas.
Speaker 10: They say they're going to decorate about thirteen hundred households
Speaker 10: throughout the area and people pay like big money for this.
Speaker 10: It's it's crazy.
Speaker 3: I don't know.
Speaker 2: I look down a Jersey short town where in the
Speaker 2: winter time there's like nobody there. Yeah, but they still
Speaker 2: decorate their house to the nines and it's completely dark,
Speaker 2: there's nobody there. It's like a competition sometimes like he
Speaker 2: has the better port. It's not like they went out
Speaker 2: to the local store and got a couple of pumpkins.
Speaker 2: No no, no, no, no.
Speaker 3: They hired something they get they went professional.
Speaker 7: They had people like Halloween this time is flying My goodness.
Speaker 2: Well there's people are really nuts about Halloween, Like sure
Speaker 2: it's big, but skeleton a lot of people.
Speaker 3: It's like as bigger, bigger than Christmas. I was going
Speaker 3: to say, a.
Speaker 7: Major US holiday.
Speaker 3: Yes, yeah, well that's what they're saying.
Speaker 10: This is becoming like the charismas like and they say
Speaker 10: they get more bang for their book because they get
Speaker 10: Halloween and Thanksgiving in one.
Speaker 3: They seem let's see.
Speaker 10: Okay, So this last one, it's about Apple's iPad pro.
Speaker 10: I don't have them, but users are saying that that
Speaker 10: it heats up and that's the problem with it. So
Speaker 10: Apple says they have a fix. This is from Mark German.
Speaker 10: He says they're working on a vaper chamber yet to
Speaker 10: improve cooling performance on the gadget as early as twenty
Speaker 10: twenty seven. Now I don't know if either of you
Speaker 10: had the iPhone seventeen promise fourteen.
Speaker 11: No, no, not yet.
Speaker 10: Okay, well, this technology is actually in that new iPhone,
Speaker 10: so they're going to bring it to the iPad.
Speaker 11: But what they're.
Speaker 10: Saying is that, you know, it's a good chance to
Speaker 10: like get people to upsell, like that's why they put it.
Speaker 11: In the iPhone seventeen. So now more people.
Speaker 10: Will spend because they're like, I don't want my hand
Speaker 10: heating up, because that was the issue with it, the
Speaker 10: titanium case. Little hand will heat up if you were
Speaker 10: on it for too long.
Speaker 3: I don't know.
Speaker 2: Just sitting out on the beach like I'm app to
Speaker 2: do in the summertime, I can go ten minutes and
Speaker 2: then my phone just goes dark because.
Speaker 3: It's too hot. Oh it, he's up.
Speaker 11: Yes, yeah, and.
Speaker 3: We got to fix that or somebody's got to fix that.
Speaker 11: See see, well maybe you have to go for the
Speaker 11: iPhone seven.
Speaker 7: No, you know, anyways to make us upgrade always.
Speaker 2: Exactly all right, John Tucker still got the clip phone,
Speaker 2: So please miss say I thank you so much. That
Speaker 2: is the world famous newspaper segment. You know what you
Speaker 2: love it here on the Bloomberg Surveillance program.
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