WEBVTT - Morgan Stanley's Mike Wilson Talks Equity Trade

0:00:02.520 --> 0:00:07.040
<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

0:00:07.760 --> 0:00:09.760
<v Speaker 2>We begin this out with stocks adding to gains to

0:00:09.840 --> 0:00:12.200
<v Speaker 2>kick off the first full week of the first quarter.

0:00:12.400 --> 0:00:14.960
<v Speaker 2>The third quarter, Mike Wilson and Walk and Stanley writing

0:00:15.160 --> 0:00:19.000
<v Speaker 2>falling down into prices, peaking, tariff inflation and contained services

0:00:19.079 --> 0:00:21.400
<v Speaker 2>keep the Fed on hold rather than hiking this year.

0:00:21.680 --> 0:00:24.680
<v Speaker 2>Lower real rates should support equities and further fuel the

0:00:24.680 --> 0:00:26.840
<v Speaker 2>broadening trade. On police to say that, Mike joins us

0:00:26.880 --> 0:00:29.120
<v Speaker 2>around the table. For the next hour. He joins us

0:00:29.120 --> 0:00:30.320
<v Speaker 2>for more. Mike, good morning, good to see you.

0:00:30.360 --> 0:00:30.760
<v Speaker 1>Good morning.

0:00:30.880 --> 0:00:32.839
<v Speaker 2>Let's just start with the stability we're seeing in the

0:00:32.920 --> 0:00:34.839
<v Speaker 2>rates market and how important that is to set the

0:00:34.840 --> 0:00:37.440
<v Speaker 2>stage for what you're anticipating in the next few months.

0:00:37.640 --> 0:00:39.040
<v Speaker 3>Yeah, I mean, I think you were saying it earlier

0:00:39.080 --> 0:00:41.440
<v Speaker 3>as listening to the show. I mean, there's somebody expecting

0:00:41.440 --> 0:00:42.920
<v Speaker 3>a hike, there someone expecting.

0:00:42.600 --> 0:00:43.960
<v Speaker 1>A cut, and we're on hold.

0:00:44.040 --> 0:00:45.360
<v Speaker 3>And this is I think what we've got to get

0:00:45.400 --> 0:00:47.839
<v Speaker 3>used to is that with the new chair probably not

0:00:47.880 --> 0:00:50.120
<v Speaker 3>giving as much guidance, is going to allow the market

0:00:50.159 --> 0:00:52.040
<v Speaker 3>to kind of figure it out on its own and

0:00:52.080 --> 0:00:55.640
<v Speaker 3>have these different different views. We're in that adjustment period now,

0:00:55.920 --> 0:00:57.400
<v Speaker 3>and I think That's one of the reason why the

0:00:57.400 --> 0:00:59.640
<v Speaker 3>market's been a little choppy or even correcting in the

0:00:59.720 --> 0:01:01.800
<v Speaker 3>last month or so, is we're getting used to this

0:01:01.840 --> 0:01:04.640
<v Speaker 3>new regime, which is going to be higher volatility and

0:01:04.959 --> 0:01:07.639
<v Speaker 3>potentially the bond market. But over time, I think what's

0:01:07.680 --> 0:01:09.280
<v Speaker 3>going to end up happening is the market's going to

0:01:09.319 --> 0:01:12.679
<v Speaker 3>settle down. It's going to it's actually more estimates. A

0:01:12.680 --> 0:01:15.440
<v Speaker 3>wider dispersion of estimates actually least to the lower volatility

0:01:15.520 --> 0:01:18.400
<v Speaker 3>in the pricing over time. But we're in that adjustment period,

0:01:18.520 --> 0:01:21.679
<v Speaker 3>so we think rates are lower ultimately, particularly.

0:01:21.240 --> 0:01:21.760
<v Speaker 1>At the back end.

0:01:21.800 --> 0:01:23.480
<v Speaker 3>And by the way, we've talked about this on the

0:01:23.520 --> 0:01:27.319
<v Speaker 3>show many times. New Treasury secretary, you know, new Fed chair,

0:01:27.760 --> 0:01:32.200
<v Speaker 3>this kind of new Fed Treasury accord to really anchor

0:01:32.440 --> 0:01:34.280
<v Speaker 3>the back end. That's what they're focused on. You got

0:01:34.319 --> 0:01:36.440
<v Speaker 3>to get the back end down or at least anchored,

0:01:36.760 --> 0:01:39.440
<v Speaker 3>because you have so much debt to shift to basically finance.

0:01:39.520 --> 0:01:41.720
<v Speaker 2>Do you think in the meantime we're confusing a reduction

0:01:41.760 --> 0:01:44.959
<v Speaker 2>and guidance with an increase in hawkishness in the meantime.

0:01:44.600 --> 0:01:47.000
<v Speaker 3>Yeah, I think that's right, and then market is pricing

0:01:47.040 --> 0:01:49.000
<v Speaker 3>that now, So that's the good news is that we've

0:01:49.000 --> 0:01:52.640
<v Speaker 3>already had that adjustment, and that adjustment started four months ago.

0:01:52.800 --> 0:01:52.960
<v Speaker 1>Right.

0:01:53.000 --> 0:01:56.000
<v Speaker 3>This is why precious metals have traded really poorly. You know,

0:01:56.240 --> 0:01:59.360
<v Speaker 3>the day that worsh was announced as a nominee, the

0:01:59.440 --> 0:02:01.960
<v Speaker 3>gold market peaked and that that was a sign the

0:02:02.000 --> 0:02:04.320
<v Speaker 3>dollar has been stronger. So once again the market has

0:02:04.400 --> 0:02:05.440
<v Speaker 3>really gotten ahead of this.

0:02:05.600 --> 0:02:07.680
<v Speaker 2>So rates of recent we come down from around four

0:02:07.680 --> 0:02:09.919
<v Speaker 2>point suo percent to four point one. There's a belief

0:02:09.919 --> 0:02:12.200
<v Speaker 2>this morning at least we've removed the urgency to hike

0:02:12.560 --> 0:02:14.320
<v Speaker 2>as soon as July, so we can put that story

0:02:14.360 --> 0:02:17.239
<v Speaker 2>to bed. Cruise the climb massive recent crewed from triple

0:02:17.280 --> 0:02:20.440
<v Speaker 2>ditchits down to the sixties on wti's Does that open

0:02:20.480 --> 0:02:22.399
<v Speaker 2>the door within the equity market and let's talk about

0:02:22.400 --> 0:02:24.880
<v Speaker 2>the stock market exclusively. Does that open the door to

0:02:24.919 --> 0:02:25.920
<v Speaker 2>the broadening trade again?

0:02:26.120 --> 0:02:28.760
<v Speaker 3>Yeah, that's our call. Basically is that that was happening

0:02:28.800 --> 0:02:31.280
<v Speaker 3>at the beginning of the year. Then we had Venezuela

0:02:31.360 --> 0:02:33.600
<v Speaker 3>and then I ran. By the way, the market priced

0:02:33.639 --> 0:02:37.440
<v Speaker 3>Iran before the invasion even happened or the attacks happened,

0:02:37.440 --> 0:02:40.359
<v Speaker 3>because because once again it was pretty well signaled, and

0:02:40.680 --> 0:02:44.400
<v Speaker 3>so that's when the broadening trade stopped. The broading trade

0:02:44.440 --> 0:02:47.040
<v Speaker 3>literally stopped the day that the attacks happened, and we

0:02:47.080 --> 0:02:49.160
<v Speaker 3>had the big spike in oil and then the pricing

0:02:49.200 --> 0:02:52.880
<v Speaker 3>of the FED to high rates. Since I say mid May,

0:02:53.080 --> 0:02:55.120
<v Speaker 3>which is when we reiterated the Briney call, we had

0:02:55.160 --> 0:02:56.959
<v Speaker 3>a different view the most we thought ore prices would

0:02:56.960 --> 0:02:59.400
<v Speaker 3>come down, and that has allowed now FED pricing to

0:02:59.440 --> 0:03:01.840
<v Speaker 3>sort of stay wise, and that has allowed the broadening

0:03:01.840 --> 0:03:03.520
<v Speaker 3>trade to regnite.

0:03:03.680 --> 0:03:06.000
<v Speaker 2>Small caps have performed nicely, just had a massive quarter

0:03:06.120 --> 0:03:08.520
<v Speaker 2>up by more than twenty percent on the rustle. We've

0:03:08.520 --> 0:03:11.120
<v Speaker 2>seen the broadening trade. Speak to the performance we've seen

0:03:11.120 --> 0:03:12.399
<v Speaker 2>in the equal white on the S and P five

0:03:12.480 --> 0:03:14.800
<v Speaker 2>hundred as well. Let's talk about a MAC seven, which

0:03:14.800 --> 0:03:17.000
<v Speaker 2>increasingly was called the Lack seven. You've got to know

0:03:17.080 --> 0:03:19.880
<v Speaker 2>out this morning talking about maybe the money going back

0:03:20.120 --> 0:03:22.360
<v Speaker 2>into the hyperscatus. Just walk us through how you're thinking

0:03:22.400 --> 0:03:24.960
<v Speaker 2>about what's happened in tech and that divergence between the

0:03:24.960 --> 0:03:27.880
<v Speaker 2>big spending companies and the beneficiaries of all that spending,

0:03:27.880 --> 0:03:31.320
<v Speaker 2>of the diviogence that's really widened in the last few months.

0:03:31.520 --> 0:03:34.400
<v Speaker 3>Yeah, I mean there's a symbiotic relationship between the spenders

0:03:34.400 --> 0:03:38.080
<v Speaker 3>and the beneficiaries and typically they trade sort of in lockstep.

0:03:38.200 --> 0:03:40.720
<v Speaker 3>And a couple of things we've been writing about for

0:03:40.760 --> 0:03:44.160
<v Speaker 3>the last several months. Number one, capex to sales. That

0:03:44.240 --> 0:03:47.240
<v Speaker 3>particular factor has been straight up since the Big Beautiful

0:03:47.240 --> 0:03:51.400
<v Speaker 3>Bill has passed. Right that basically the government's incenting businesses

0:03:51.440 --> 0:03:52.080
<v Speaker 3>to spend.

0:03:51.800 --> 0:03:53.360
<v Speaker 1>Money today rather than later.

0:03:53.760 --> 0:03:56.360
<v Speaker 3>And so that capex of sales factor has been driving

0:03:56.480 --> 0:03:57.600
<v Speaker 3>a lot of stocks higher.

0:03:57.920 --> 0:03:59.240
<v Speaker 1>That looks like it's peaking now.

0:03:59.480 --> 0:04:01.800
<v Speaker 3>And by the way, the hyperscaler stocks started to trade

0:04:01.800 --> 0:04:04.680
<v Speaker 3>poorly about a month and a half ago and into

0:04:04.720 --> 0:04:08.400
<v Speaker 3>this idea. But that's not sustainable. You can't have the

0:04:08.520 --> 0:04:12.520
<v Speaker 3>spender stocks trading poorly and the beneficiary stacks continuing to

0:04:12.520 --> 0:04:14.839
<v Speaker 3>go straight up. And now what we saw last week,

0:04:14.880 --> 0:04:16.800
<v Speaker 3>you know, Meta announced perhaps they're going to sell some

0:04:16.880 --> 0:04:21.440
<v Speaker 3>excess capacity, maybe turned into a provider of capacity. That

0:04:21.640 --> 0:04:24.480
<v Speaker 3>is just a reason for these things to take a break. Also,

0:04:24.520 --> 0:04:27.400
<v Speaker 3>peak great a change on revision breath, right, the memory stocks,

0:04:27.400 --> 0:04:30.400
<v Speaker 3>the revisions have been spectacular, but they can only go

0:04:30.480 --> 0:04:32.839
<v Speaker 3>so high. So all that's kind of happening at the

0:04:32.839 --> 0:04:35.880
<v Speaker 3>same time, and I expect the hyperscalers now to stabilize.

0:04:35.920 --> 0:04:37.440
<v Speaker 3>That's what's going on in the last couple of weeks,

0:04:37.480 --> 0:04:39.159
<v Speaker 3>and the semic counter stocks are going to are going

0:04:39.240 --> 0:04:39.719
<v Speaker 3>to correct.

0:04:39.920 --> 0:04:41.279
<v Speaker 1>That's a good development.

0:04:41.360 --> 0:04:44.320
<v Speaker 3>That doesn't mean the capeck cycle is over, but that

0:04:44.440 --> 0:04:47.520
<v Speaker 3>ebbing and flowing between the two is a natural kind

0:04:47.560 --> 0:04:51.360
<v Speaker 3>of governing factor because you can't have this divergence continue.

0:04:51.360 --> 0:04:52.160
<v Speaker 1>It's unstable.

0:04:52.279 --> 0:04:54.880
<v Speaker 2>Your words take a break. That's interesting. Some people have

0:04:54.920 --> 0:04:57.240
<v Speaker 2>called it a narrative shift for the overall trade and

0:04:57.279 --> 0:04:59.080
<v Speaker 2>maybe a shift in spending. Two. Why is it one

0:04:59.160 --> 0:04:59.640
<v Speaker 2>or not the other?

0:05:00.080 --> 0:05:02.080
<v Speaker 3>Well, we don't know for sure, but we've had three

0:05:02.080 --> 0:05:04.840
<v Speaker 3>of these already, John, So since chance GPT was announced

0:05:04.839 --> 0:05:07.479
<v Speaker 3>in November twenty two, we've had three of these sort

0:05:07.520 --> 0:05:10.880
<v Speaker 3>of mini cycles within the broader structural capex cycle, which

0:05:10.920 --> 0:05:13.400
<v Speaker 3>is that the market starts to question, oh, the return

0:05:13.480 --> 0:05:16.200
<v Speaker 3>on capital isn't good enough to support this kind of capex.

0:05:16.560 --> 0:05:18.880
<v Speaker 3>What happens Then the stocks trade poorly, and then the

0:05:18.920 --> 0:05:21.400
<v Speaker 3>CEOs of those companies come out and say, well, you know,

0:05:21.440 --> 0:05:24.159
<v Speaker 3>maybe we won't spend as aggressively, and then it abbs

0:05:24.200 --> 0:05:26.320
<v Speaker 3>the other way. And so that's that's the story. That's

0:05:26.400 --> 0:05:29.159
<v Speaker 3>the dance back and forth. Now there is going to

0:05:29.160 --> 0:05:30.520
<v Speaker 3>be a period there is going to be a time,

0:05:30.560 --> 0:05:32.720
<v Speaker 3>we don't know when it's going to happen yet, where

0:05:33.200 --> 0:05:35.800
<v Speaker 3>the CAPEC cycle will exhaust itself, and we will have

0:05:36.240 --> 0:05:37.960
<v Speaker 3>you know, we've talked about this that there is going

0:05:38.040 --> 0:05:40.560
<v Speaker 3>to be mal investment here. We don't think that that

0:05:40.760 --> 0:05:43.599
<v Speaker 3>spending cycle is over because they just start raising the

0:05:43.600 --> 0:05:45.679
<v Speaker 3>capital and the credit market, so they're going to spend

0:05:45.680 --> 0:05:49.400
<v Speaker 3>the capital. Okay, So but we can have these mini

0:05:49.440 --> 0:05:51.799
<v Speaker 3>cycles within in the structurable market of compul.

0:05:51.839 --> 0:05:54.200
<v Speaker 2>I think, as you know, though, forget the spending that's

0:05:54.240 --> 0:05:56.560
<v Speaker 2>not yet happened, is the intentions that matter. At a

0:05:56.640 --> 0:06:00.200
<v Speaker 2>deceleration in capex intentions from here, how do you think

0:06:00.200 --> 0:06:02.919
<v Speaker 2>this market's going to internalize the prospect of that in

0:06:02.960 --> 0:06:03.640
<v Speaker 2>the coming months.

0:06:03.680 --> 0:06:04.680
<v Speaker 1>Well, it's doing it right now.

0:06:04.720 --> 0:06:06.719
<v Speaker 3>So we talk about it as a peak rate of

0:06:06.800 --> 0:06:10.320
<v Speaker 3>change or you know, trough rate of change. Second derivative growth,

0:06:10.440 --> 0:06:12.440
<v Speaker 3>and that's exactly what's going on. There's two things we're

0:06:12.440 --> 0:06:16.159
<v Speaker 3>focused on. Ernie's revision breath for the semi country stocks

0:06:16.200 --> 0:06:18.840
<v Speaker 3>themselves are like seventy five percent. That's about as high

0:06:18.839 --> 0:06:20.760
<v Speaker 3>as it goes. We've documented that, so that's going to

0:06:20.839 --> 0:06:23.279
<v Speaker 3>roll over. It doesn't mean it goes negative. But the

0:06:23.360 --> 0:06:26.440
<v Speaker 3>deceleration on that can cause those stocks to correct, and

0:06:26.440 --> 0:06:29.159
<v Speaker 3>then of course the hyperscalers will benefit if the market

0:06:29.200 --> 0:06:32.400
<v Speaker 3>perceives these companies as being somewhat capex disciplined, that they're

0:06:32.400 --> 0:06:35.000
<v Speaker 3>not going to do willy nilly spending in a way

0:06:35.040 --> 0:06:37.800
<v Speaker 3>where free cash flow goes to zero or negative. And

0:06:38.040 --> 0:06:40.039
<v Speaker 3>by the way, free cast real expectations for some of

0:06:40.040 --> 0:06:40.920
<v Speaker 3>those companies.

0:06:40.640 --> 0:06:42.960
<v Speaker 1>Are going towards zero. That's why they've underperformed.

0:06:43.160 --> 0:06:45.280
<v Speaker 3>So it's just stands like I said back and forth,

0:06:45.560 --> 0:06:47.680
<v Speaker 3>and now in the last week and a half, the hyperscaler,

0:06:47.760 --> 0:06:49.719
<v Speaker 3>some of the hyperscalar stocks have started to trade better.

0:06:50.120 --> 0:06:51.640
<v Speaker 3>That's a good sign that we're going to have a

0:06:51.640 --> 0:06:54.280
<v Speaker 3>little correction. This could last you know, four, six, eight

0:06:54.360 --> 0:06:56.240
<v Speaker 3>weeks something like that, and then we'll probably have the

0:06:56.240 --> 0:06:57.640
<v Speaker 3>next upcycle for the semi.

0:06:57.600 --> 0:06:59.560
<v Speaker 2>These are names that we're in bear markets. I'm talking

0:06:59.560 --> 0:07:02.560
<v Speaker 2>about met To, Microsoft Matter had a better week last week.

0:07:02.760 --> 0:07:03.080
<v Speaker 1>Chips.

0:07:03.120 --> 0:07:05.080
<v Speaker 2>You keep using this word correct. When I hear that,

0:07:05.120 --> 0:07:06.960
<v Speaker 2>I'm just thinking, what do you mean by that? How

0:07:07.040 --> 0:07:09.039
<v Speaker 2>much is the downside? How big is the downside for

0:07:09.080 --> 0:07:09.600
<v Speaker 2>somebody's chip?

0:07:09.680 --> 0:07:09.840
<v Speaker 1>Nips?

0:07:09.880 --> 0:07:11.560
<v Speaker 3>Well, these are hype beta stocks. I mean, they can

0:07:11.600 --> 0:07:13.480
<v Speaker 3>correct thirty forty percent in a ball market.

0:07:13.560 --> 0:07:13.640
<v Speaker 1>No.

0:07:13.800 --> 0:07:15.040
<v Speaker 3>By the way, just look at the tun or day

0:07:15.040 --> 0:07:17.440
<v Speaker 3>moving average. That's so that's probably a really good gauge.

0:07:17.840 --> 0:07:21.840
<v Speaker 3>These stocks are so extended relative to those moving averages.

0:07:22.200 --> 0:07:23.800
<v Speaker 3>That's how you got to think about it. Those moving

0:07:23.840 --> 0:07:26.760
<v Speaker 3>averages exist for a reason, right, They always return to

0:07:26.760 --> 0:07:29.480
<v Speaker 3>the moving averages. Does it happen in a violent way

0:07:29.560 --> 0:07:31.280
<v Speaker 3>or does it happen kind of gradually over time?

0:07:31.360 --> 0:07:32.200
<v Speaker 1>Walked? Await and see?

0:07:32.440 --> 0:07:35.200
<v Speaker 3>But yeah, thirty percent correction in these stocks is I mean,

0:07:35.320 --> 0:07:37.200
<v Speaker 3>well within possibility.

0:07:37.200 --> 0:07:38.720
<v Speaker 1>In fact, some of them already have corrected. There.

0:07:38.840 --> 0:07:41.320
<v Speaker 2>You can have a thirty percent correction in chips just

0:07:41.520 --> 0:07:44.000
<v Speaker 2>bear with me here, and you can still see the

0:07:44.040 --> 0:07:46.080
<v Speaker 2>index move up and to the right on the S

0:07:46.160 --> 0:07:48.280
<v Speaker 2>and P five hundred even with a massive weight and

0:07:48.320 --> 0:07:50.840
<v Speaker 2>they have well we didn't say pay that's what I'm.

0:07:51.240 --> 0:07:52.880
<v Speaker 3>But I mean, that's part of our call too, is

0:07:52.920 --> 0:07:57.280
<v Speaker 3>that we think this rotation is happening in a down tape. Okay,

0:07:57.480 --> 0:08:00.000
<v Speaker 3>unlike the correction we saw on the precious metal staff

0:08:00.440 --> 0:08:04.080
<v Speaker 3>in January. Because they're such a small part of the index.

0:08:04.280 --> 0:08:06.840
<v Speaker 3>Energy stocks had a big correction after having a great

0:08:06.880 --> 0:08:09.600
<v Speaker 3>run in January and February. Now the market traded off

0:08:09.600 --> 0:08:12.200
<v Speaker 3>a little bit because of the war itself. But so

0:08:12.520 --> 0:08:14.400
<v Speaker 3>I agree with what you're saying, or your premise or

0:08:14.400 --> 0:08:17.080
<v Speaker 3>your question, which is, since these stocks are such a

0:08:17.120 --> 0:08:18.840
<v Speaker 3>big part of the index, it's going to be really

0:08:18.880 --> 0:08:21.880
<v Speaker 3>hard for the index to make any upward progress until

0:08:21.960 --> 0:08:23.760
<v Speaker 3>this rotation has sort of happened.

0:08:24.040 --> 0:08:25.320
<v Speaker 2>This is a summer story for you.

0:08:25.520 --> 0:08:28.320
<v Speaker 3>Oh yeah, I mean, we're not bearish on the year end.

0:08:28.320 --> 0:08:31.960
<v Speaker 3>We're still eight thousand plus per year end, and we've

0:08:32.000 --> 0:08:33.760
<v Speaker 3>had that call for quite a while based on the

0:08:33.760 --> 0:08:36.120
<v Speaker 3>earning story. So that earning story is very much intact.

0:08:36.200 --> 0:08:38.680
<v Speaker 3>In fact, the fact that we're rotating now to some

0:08:38.720 --> 0:08:41.719
<v Speaker 3>of these other areas almost confirms the thesis we've had

0:08:41.720 --> 0:08:44.800
<v Speaker 3>all year, which is this is not just a techt story.

0:08:45.000 --> 0:08:47.840
<v Speaker 3>That's a great story, but the broadening story is the

0:08:47.880 --> 0:08:51.080
<v Speaker 3>story that I think people have really underestimated the rolling

0:08:51.120 --> 0:08:54.000
<v Speaker 3>recession from a year ago, this operating lever story, which

0:08:54.040 --> 0:08:55.960
<v Speaker 3>I think is still very underappreciated.

0:08:56.000 --> 0:08:57.720
<v Speaker 2>Do you think the banks can start working now too?

0:08:57.920 --> 0:08:58.079
<v Speaker 1>Well?

0:08:58.080 --> 0:09:01.160
<v Speaker 3>They have been I mean, the the money center banks

0:09:01.160 --> 0:09:03.319
<v Speaker 3>and the capital market spanks related have.

0:09:03.559 --> 0:09:07.080
<v Speaker 2>Been Your stock absolutely Delvin Stock's fantastic. I'm talking about the.

0:09:07.040 --> 0:09:09.520
<v Speaker 3>Others regionals and so they've started to perform, and that's

0:09:09.559 --> 0:09:12.559
<v Speaker 3>been an area we've been highlighting. Now the yal curve

0:09:12.559 --> 0:09:14.920
<v Speaker 3>is flattening still or you know, is having trouble kind

0:09:14.920 --> 0:09:17.760
<v Speaker 3>of resteepening, so I think that group could pause a bit.

0:09:17.800 --> 0:09:19.800
<v Speaker 3>We took that off of our list of favorites for

0:09:19.880 --> 0:09:23.120
<v Speaker 3>the for the broadening trade this week, but ultimately between

0:09:23.120 --> 0:09:25.040
<v Speaker 3>now and year end, we do think the banks are

0:09:25.080 --> 0:09:27.439
<v Speaker 3>going to do quite well because this is the strategy

0:09:27.559 --> 0:09:29.600
<v Speaker 3>of the Treasury and the Fed is they want more

0:09:29.720 --> 0:09:33.719
<v Speaker 3>lending going through the traditional lending sector. So while the

0:09:33.760 --> 0:09:36.880
<v Speaker 3>your curve is flattening, loan growth is accelerating and that's

0:09:36.920 --> 0:09:40.400
<v Speaker 3>feeding this whole broadening out story of the economy, right.

0:09:40.400 --> 0:09:42.480
<v Speaker 3>This is a strategy of the administration. They want a

0:09:43.280 --> 0:09:47.640
<v Speaker 3>privately driven organic economic expansion and that's what we're getting,

0:09:47.840 --> 0:09:50.920
<v Speaker 3>notwithstanding that maybe the labor market isn't as robust as

0:09:50.920 --> 0:09:53.480
<v Speaker 3>some people were hoping, But that's also then feeding the

0:09:53.480 --> 0:09:56.560
<v Speaker 3>earning story, right because you're seeing revenue growth without a

0:09:56.720 --> 0:09:59.280
<v Speaker 3>crazy need to hire a bunch of people, and that's

0:09:59.280 --> 0:10:00.280
<v Speaker 3>the operating liver story.

0:10:00.320 --> 0:10:02.439
<v Speaker 2>One oh one, This market mic has been conditioned just

0:10:02.480 --> 0:10:05.680
<v Speaker 2>to ignore all of this. This market burned by anyone,

0:10:06.040 --> 0:10:09.280
<v Speaker 2>of course, anyone who was sure the market at the

0:10:09.400 --> 0:10:11.320
<v Speaker 2>end of March for the next month or so got

0:10:11.360 --> 0:10:13.760
<v Speaker 2>burnt really hard. Why should it pay any attention to

0:10:14.040 --> 0:10:15.199
<v Speaker 2>any of this over the next week?

0:10:15.480 --> 0:10:17.719
<v Speaker 3>Well would I would say, is the market intends to

0:10:17.720 --> 0:10:19.320
<v Speaker 3>get in front of this stuff. So what I'm trying

0:10:19.360 --> 0:10:21.080
<v Speaker 3>to figure out is what is it what is it

0:10:21.120 --> 0:10:23.800
<v Speaker 3>digesting in the next six months. And I am this

0:10:23.840 --> 0:10:24.959
<v Speaker 3>is one of the reason why I'm looking at that

0:10:25.000 --> 0:10:26.440
<v Speaker 3>bullish in a short term for the I think we

0:10:26.520 --> 0:10:28.280
<v Speaker 3>have this kind of low oil prices at this point.

0:10:28.320 --> 0:10:30.000
<v Speaker 1>I mean tink it's down, it's in the market. Yeah,

0:10:30.000 --> 0:10:30.560
<v Speaker 1>well it means.

0:10:30.640 --> 0:10:32.800
<v Speaker 3>Oil prices are seventy bucks again. So it's going to

0:10:32.880 --> 0:10:35.640
<v Speaker 3>be hard to really get oil prices below that level,

0:10:35.840 --> 0:10:38.360
<v Speaker 3>you know, without you know, significant new source of oil

0:10:38.440 --> 0:10:40.720
<v Speaker 3>or maybe demand being destroyed further, which is probably not

0:10:40.760 --> 0:10:42.760
<v Speaker 3>a good thing for gross So I think this is

0:10:42.800 --> 0:10:44.320
<v Speaker 3>another part of the story is that we you know,

0:10:44.360 --> 0:10:46.320
<v Speaker 3>the market got ahead of this in April and May

0:10:46.360 --> 0:10:48.360
<v Speaker 3>it said oil price is ry to change and oil

0:10:48.360 --> 0:10:51.240
<v Speaker 3>prices are peaked. Okay, that the conflict that you know

0:10:51.280 --> 0:10:53.280
<v Speaker 3>continues to go in between Ukraine and Russia. I mean,

0:10:53.440 --> 0:10:56.080
<v Speaker 3>like to me, this is sort of back and forth

0:10:56.120 --> 0:10:58.439
<v Speaker 3>and it's uncertain, But the market, just like tariffs a

0:10:58.480 --> 0:11:01.400
<v Speaker 3>year ago, the worst, the rate of change, the worst

0:11:01.440 --> 0:11:03.600
<v Speaker 3>part of it is now behind and markets are always

0:11:03.600 --> 0:11:05.679
<v Speaker 3>forward thinking. So I'm trying to figure what's going to

0:11:05.679 --> 0:11:07.440
<v Speaker 3>happen in six months that was happening next week