WEBVTT - Bloomberg Surveillance October 16, 2024 0:00:00.160 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.720 live on Bloomberg Television weekday mornings from six to nine 0:00:27.760 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.000 Terminal and the Bloomberg Business App. Here's an update on 0:00:37.040 --> 0:00:40.159 the Book of America Global Fund Manager survey. It captures 0:00:40.159 --> 0:00:43.320 a big bullish shift and investor sentiment, showing the biggest 0:00:43.360 --> 0:00:46.159 jump in investor optimism since June twenty twenty and the 0:00:46.240 --> 0:00:49.040 largest jump in global growth expectation since May of the 0:00:49.080 --> 0:00:52.080 same year. To dig deeper into the results into the survey, 0:00:52.240 --> 0:00:54.720 Elias Galuo of Bank of America Securities joins us now 0:00:54.800 --> 0:00:58.000 for more. Alius, Welcome to the program, sir, this is bullish. 0:00:58.120 --> 0:01:04.160 My first question to you is it little bit too bullish? 0:01:04.240 --> 0:01:04.399 Hi? 0:01:04.520 --> 0:01:07.560 John, Look, I mean this was really a global fund 0:01:07.560 --> 0:01:10.399 manager survey for the Books. As you just said, you know, 0:01:10.880 --> 0:01:15.000 one of the biggest rides ever in global growth expectation. Look, 0:01:15.080 --> 0:01:17.480 this is a series that goes back all the way 0:01:17.560 --> 0:01:21.880 to nineteen ninety four and we saw the in fact, 0:01:21.920 --> 0:01:25.720 the fifth largest monthly jump in a growth expectation in 0:01:25.760 --> 0:01:29.920 the past thirty years. So yes, definitely a bullish survey. 0:01:30.160 --> 0:01:32.160 And for the first time in the past three years, 0:01:32.200 --> 0:01:37.360 positioning is also equally bullish, and I would say that yes, 0:01:37.440 --> 0:01:40.760 the bulls are very much in control and have clearly 0:01:40.840 --> 0:01:42.720 led the charge in the past month. 0:01:43.000 --> 0:01:46.080 Elias John pointed to this before this idea that Max 0:01:46.120 --> 0:01:50.000 Ketner over HSBC actually sees pretty neutral positioning and you're 0:01:50.000 --> 0:01:53.280 talking about pretty bullish positioning. Which is it. 0:01:56.480 --> 0:01:58.560 You just need to look at a few different metrics 0:01:58.560 --> 0:02:03.920 across the glos for Manager survey to just see bullishness 0:02:03.960 --> 0:02:07.080 is very much spread across the different asset classes. The 0:02:07.120 --> 0:02:09.800 most important, I would say is the FMS cash level, 0:02:09.840 --> 0:02:12.120 again a series that goes back all the way to 0:02:12.560 --> 0:02:16.959 the late twentieth century, and that FMS cash level dropped 0:02:17.000 --> 0:02:19.960 below four percent to three point nine percent for the 0:02:20.000 --> 0:02:23.040 first time since June twenty twenty one. We use it 0:02:23.040 --> 0:02:28.360 as a contrarian indicator when investors are under invested in 0:02:28.400 --> 0:02:32.400 the market, hence the cash level. Above five percent, we 0:02:32.760 --> 0:02:34.919 think that you should buy the market, and when it 0:02:35.000 --> 0:02:37.960 drops below four percent, we think you should sell the market. 0:02:38.160 --> 0:02:41.639 And at this stage, our FMS cash rule says that 0:02:41.760 --> 0:02:45.600 at this juncture, positioning is becoming a headwind. You also 0:02:45.680 --> 0:02:49.360 look at the cross asset allocation. Equities allocation rose to 0:02:49.639 --> 0:02:53.880 net thirty one percent overweight, and that's the largest one 0:02:53.919 --> 0:02:58.600 month jump in equity exposure since November twenty twenty. On 0:02:58.639 --> 0:03:01.960 the other hand, we saw a big decline in bond allocation, 0:03:02.160 --> 0:03:06.120 in fact, the largest one month decline in bond a 0:03:06.160 --> 0:03:10.800 location that we ever recorded. And the velocity of the 0:03:10.880 --> 0:03:16.880 rotation was also quite exceptional. Across markets. EM equities were 0:03:16.919 --> 0:03:20.520 the big winners, with a twenty point rise in exposure 0:03:20.560 --> 0:03:24.120 to em stocker location. And that's really related to the 0:03:24.240 --> 0:03:25.200 China stimulus. 0:03:25.320 --> 0:03:26.839 That's what I was going to ask. Was it really 0:03:26.880 --> 0:03:30.240 just the China stimulus that ignited this rotation, this unleashing 0:03:30.680 --> 0:03:34.040 of truly bullish spirits, or is it a combination of things. 0:03:36.680 --> 0:03:39.560 It is definitely the China stimilus, but it's really the 0:03:39.560 --> 0:03:42.760 combination of three factors. Number one is that the conviction 0:03:42.920 --> 0:03:47.240 regarding global soft lending remains very much intact. Seventy six 0:03:47.280 --> 0:03:51.680 percent of FMS investors still believe the global economy will 0:03:51.720 --> 0:03:55.440 experience a soft lending. Note that the balance of risk 0:03:55.520 --> 0:04:00.160 has shifted to the upside because now the alternative scenario 0:04:00.440 --> 0:04:03.720 is no more hard landing, it's no lending. The second 0:04:03.720 --> 0:04:08.280 big reason LISA is related to a big FED cut expectation. 0:04:09.160 --> 0:04:12.640 FMS investors expect roughly one hundred and sixty BIPs of 0:04:13.040 --> 0:04:15.720 cuts from the Federal Reserve in the next twelve months. 0:04:15.800 --> 0:04:19.320 That's pretty much in line with market expectation. And lastly, 0:04:19.440 --> 0:04:22.360 of course, the China stimulus, which really is seen as 0:04:22.400 --> 0:04:25.880 a GameChanger because when you and I met a month ago, 0:04:26.279 --> 0:04:30.359 China growth expectation had hit a three year low. Fast 0:04:30.360 --> 0:04:32.720 forward to today, than now the highest they have been 0:04:32.800 --> 0:04:34.080 since April twenty three. 0:04:34.320 --> 0:04:36.360 If you're one of those contraris taking on the hard 0:04:36.400 --> 0:04:39.240 landing or no landing scenario, what does that mean for trade? 0:04:39.279 --> 0:04:41.200 These individuals, these investors want to put on. 0:04:43.640 --> 0:04:47.679 Yes, definitely, Who are the contrariants today that would believe 0:04:48.000 --> 0:04:50.839 hard lending is their main scenario and also those that 0:04:50.880 --> 0:04:53.880 would expect a no lending to happen in twenty twenty five. 0:04:54.120 --> 0:04:57.960 But if you are a hard lending believer, then definitely 0:04:58.000 --> 0:05:00.279 you should go a long the thirty year treasury. You 0:05:00.279 --> 0:05:04.040 should pivot into defensives, you should pivot into cash, and 0:05:04.080 --> 0:05:07.719 you should really slash your location to equities and risk 0:05:07.760 --> 0:05:08.560 asset in general. 0:05:08.800 --> 0:05:11.000 Oh yes, we just I want to get your thoughts 0:05:11.040 --> 0:05:13.880 on what are investors, given how bullish they are, what 0:05:13.960 --> 0:05:15.000 are they nervous about? 0:05:18.520 --> 0:05:22.680 We always ask in the FMS the main tail risk 0:05:23.160 --> 0:05:26.479 for according to investors, and this month it was a 0:05:26.600 --> 0:05:30.919 geopolitical conflict. They are still a little bit worried about inflation, 0:05:31.120 --> 0:05:36.279 but definitely less worried about US economic hard lending. So yes, 0:05:36.360 --> 0:05:39.359 geopolitical conflict. And I would say, on the other hand, 0:05:39.800 --> 0:05:43.560 what would really scare investors is that if central banks 0:05:43.600 --> 0:05:47.240 do not deliver the big easing that they are expecting. 0:05:47.600 --> 0:05:51.120 A month ago we said that investors were nervous bulls. 0:05:51.480 --> 0:05:54.239 Now they have just become bulls that are leading the charge. 0:05:54.360 --> 0:05:57.560 I mean, it would definitely still be about geopolitics and 0:05:57.640 --> 0:05:58.440 about inflation. 0:05:58.640 --> 0:06:00.479 Alas you can see that bull as shift big time 0:06:00.720 --> 0:06:02.800 in the Fund Manager survey. Appreciate an update from you 0:06:02.839 --> 0:06:05.760 as always, Sir Alis Kalu, the Bank for America Securities, 0:06:15.640 --> 0:06:17.799 the Bridy, and Julia Coronado joins us now for more. Julia, 0:06:17.839 --> 0:06:19.719 welcome back to the program. It's been far too long. 0:06:20.000 --> 0:06:22.960 Let's talk about the next job's report, not the last one. 0:06:23.080 --> 0:06:26.600 Governor Wallas all come out already and set the bar 0:06:26.720 --> 0:06:28.880 just a little bit lower, given some of the effects 0:06:28.880 --> 0:06:31.039 we could get from hurricanes and a strikeover a Boeing, 0:06:31.120 --> 0:06:32.640 how much low would you think the bar needs to 0:06:32.640 --> 0:06:34.440 be reset going into November. 0:06:35.400 --> 0:06:39.240 Look, I feel like a twenty five basis point rate 0:06:39.320 --> 0:06:42.640 cut by the Fed in November is pretty much I 0:06:42.680 --> 0:06:44.880 would I don't want to say a lock that's too strong, 0:06:45.040 --> 0:06:47.800 but the bar is very high. To deviate from that. 0:06:47.839 --> 0:06:50.400 The data is going to be messy. We all know 0:06:50.600 --> 0:06:53.760 that it's going to look weaker than it actually is, 0:06:53.800 --> 0:06:55.640 and it's just going to take some time to sort 0:06:55.680 --> 0:06:58.280 it out. I think the Fed has seen ena in 0:06:58.360 --> 0:07:03.560 the backward looking data that the economy is solid enough 0:07:03.720 --> 0:07:06.680 that they don't need to worry about it falling off 0:07:06.680 --> 0:07:10.120 a cliff, but nor is it overheating in a way 0:07:10.120 --> 0:07:12.560 that they need to maybe consider a pause. So I 0:07:12.600 --> 0:07:15.760 think we're still look, we're still one hundred basis points 0:07:15.800 --> 0:07:18.160 at least from any concept of neutral. They don't need 0:07:18.200 --> 0:07:19.880 to be in a hurry, but nor do they need 0:07:19.920 --> 0:07:26.040 to be overly cautious or reactive to any inflation print. 0:07:26.200 --> 0:07:27.720 Well, it did put a number on it. He said 0:07:27.720 --> 0:07:29.320 it could be around one hundred k. We could take 0:07:29.360 --> 0:07:31.160 off one hundred k from the number. Are you in 0:07:31.200 --> 0:07:32.800 a similar ballpark with you in the team? Is that 0:07:32.840 --> 0:07:33.600 what you're looking for? 0:07:34.560 --> 0:07:37.480 Yeah, I mean it's hard to calibrate right now. Honestly, 0:07:37.520 --> 0:07:42.800 we're still gauging from jobless claims and other reports about 0:07:42.800 --> 0:07:46.440 how much disruption there's going to be. It's very limited 0:07:46.440 --> 0:07:50.080 ability to see that in advance. So again it's just 0:07:50.120 --> 0:07:52.520 going to take some time. But one hundred k, I mean, certainly, 0:07:52.560 --> 0:07:56.640 given the Boeing strike, which we can calibrate, that sounds 0:07:56.680 --> 0:07:59.440 about right somewhere in that ballpark. It could be bigger, 0:07:59.440 --> 0:08:02.559 it could be small, and then it'll wash back and 0:08:02.680 --> 0:08:06.680 in the November jobs report. So we're just going to 0:08:06.760 --> 0:08:09.720 have to see how that sort of nets out over time. 0:08:10.120 --> 0:08:12.560 Julia, what are you looking for in retail sales tomorrow? 0:08:12.600 --> 0:08:15.720 And I see this especially after bank earnings that demonstrate 0:08:15.840 --> 0:08:18.600 just how solid consumers are and the ability that they 0:08:18.600 --> 0:08:20.320 have to actually continue to lever up. 0:08:22.000 --> 0:08:25.400 Yeah, lever up is an interesting term. Consumers really aren't 0:08:25.440 --> 0:08:28.720 borrowing excessively debt to income. Actually, in the latest flow 0:08:28.760 --> 0:08:31.800 of funds report went down, so this is not a 0:08:31.880 --> 0:08:36.079 consumer that's necessarily relying on debt to finance its spending. 0:08:36.120 --> 0:08:39.400 I think what we have is a dual consumer sort 0:08:39.440 --> 0:08:42.800 of increasing divide in the consumer sector, where you've got 0:08:42.840 --> 0:08:45.520 people that maybe didn't get as big a raise this year, 0:08:45.559 --> 0:08:48.680 they've got a tailwind from inflation, but they're very budget conscious. 0:08:48.720 --> 0:08:52.720 We hear that from retailers, so they're spending but very cautiously. 0:08:52.760 --> 0:08:54.959 And then we've got the upper end of consumers who 0:08:54.960 --> 0:08:57.920 are feeling really good because network is very high, financial 0:08:57.960 --> 0:09:00.720 conditions are easy, and there may be spending a little 0:09:00.760 --> 0:09:03.240 bit more, but they also have the means to do so. 0:09:03.240 --> 0:09:07.280 So on balance, you've got a median consumer that's probably 0:09:07.320 --> 0:09:09.720 a little bit more stretched than they were a year ago, 0:09:10.800 --> 0:09:14.040 maybe a bit more cautious. But on the other hand, 0:09:14.080 --> 0:09:16.400 you've got high end consumers that are doing just fine, 0:09:16.400 --> 0:09:18.800 thank you very much, and that's enough to power the 0:09:18.840 --> 0:09:22.800 economy forward. So we've had a string of very solid 0:09:22.840 --> 0:09:26.960 retail sales reports. There's no signs that were of some 0:09:27.000 --> 0:09:30.800 sort of imminent collapse. I think expectations for the holiday 0:09:30.840 --> 0:09:34.480 season or that it'll be fine, not a blowout, not 0:09:34.640 --> 0:09:38.800 a disaster. So I think the economy is kind of 0:09:38.840 --> 0:09:41.240 in a good, solid zone, which. 0:09:41.000 --> 0:09:42.880 Is certainly what we're hearing reflected by a number of 0:09:42.880 --> 0:09:44.880 Fed members who want to keep it that way and 0:09:44.960 --> 0:09:48.480 want to keep cutting rates in tandem with inflation coming down, 0:09:48.559 --> 0:09:51.320 Which really brings me to this question of why do 0:09:51.400 --> 0:09:54.080 you think that people are so confident about the path 0:09:54.120 --> 0:09:57.560 of disinflation now versus say a month ago. What has 0:09:57.679 --> 0:10:01.000 changed to make the prospects of inflation remaining at this 0:10:01.160 --> 0:10:04.120 level or actually to go higher. Why is that now 0:10:04.160 --> 0:10:04.760 off the table. 0:10:06.280 --> 0:10:08.160 I wouldn't say it's off the table. I would just 0:10:08.200 --> 0:10:11.520 say the chances of that keep going down the composition 0:10:11.640 --> 0:10:15.760 of inflation, and I think President Daily noted this yesterday. 0:10:16.160 --> 0:10:19.680 One area that's really improved this year is supercore inflation, 0:10:19.800 --> 0:10:24.040 particularly in the FEDS preferred PCE measure, really has kind 0:10:24.080 --> 0:10:27.640 of come off that stickiness. It was in the sticky zone. 0:10:27.720 --> 0:10:30.840 It wasn't clear how quickly that would moderate. We are 0:10:30.880 --> 0:10:36.160 seeing progress there. We are seeing progress gradually in the 0:10:36.200 --> 0:10:41.360 shelter component and housing inflation. So just the composition of 0:10:41.400 --> 0:10:44.760 inflation looks a lot better, a lot healthier, a lot 0:10:44.840 --> 0:10:48.720 more like it did before the pandemic, and so the 0:10:48.880 --> 0:10:52.320 risks of it getting stuck too high are just going down. 0:10:52.840 --> 0:10:56.040 And then if you think about things like commodity prices, 0:10:56.080 --> 0:11:00.280 look at how many global shocks we are absorbing, one 0:11:00.320 --> 0:11:04.520 after another, and yet commodity prices really it's the dog 0:11:04.559 --> 0:11:07.880 that hasn't barked this year. It's gone up and it's 0:11:07.920 --> 0:11:10.200 gone down, but really we're still in the same zone 0:11:10.240 --> 0:11:13.880 on energy prices we've been all year. So yes, there's risks, 0:11:13.960 --> 0:11:17.480 always risks, but I think a cooling China has really 0:11:17.520 --> 0:11:20.440 taken the edge off of what we might have otherwise 0:11:20.520 --> 0:11:24.000 seen in terms of input costs coming through from from 0:11:24.120 --> 0:11:25.199 those global shocks. 0:11:25.440 --> 0:11:28.880 Julia, we are less than four weeks, about three weeks 0:11:28.880 --> 0:11:31.600 away from the US election, and a big question is 0:11:31.760 --> 0:11:34.559 US is on solid footing. How different are the scenarios 0:11:34.920 --> 0:11:38.480 in terms of the policy frameworks after November fifth? What 0:11:38.520 --> 0:11:42.040 are you looking for? How different could these two economic 0:11:42.120 --> 0:11:44.320 scenarios be according to your models? 0:11:45.000 --> 0:11:50.080 Yeah, it's an unusual divide for you know, most presidential elections. 0:11:50.080 --> 0:11:52.040 It's a little bit around the edges, right, a little 0:11:52.080 --> 0:11:55.880 bit more tax cuts versus spending. We're talking about a 0:11:56.080 --> 0:11:59.160 very different scenario in a Trump two point zero. A 0:11:59.200 --> 0:12:02.280 Trump two points wouldn't look like a Trump one point zero, 0:12:02.679 --> 0:12:06.559 The staffing wouldn't be the same. The blueprint for policy 0:12:06.679 --> 0:12:10.000 is certainly a lot more extreme than what he was 0:12:10.040 --> 0:12:12.520 able to do in his first term. I see it 0:12:12.559 --> 0:12:16.000 as a pretty disruptive scenario. It would see. His plan 0:12:16.160 --> 0:12:18.440 is to invoke a global trade war from the get 0:12:18.480 --> 0:12:23.320 go and to be you know, turn off that flow 0:12:23.360 --> 0:12:27.000 of immigration that's been quite a tailwind for the macro economy, 0:12:27.520 --> 0:12:30.560 and not only turn off the flow of new immigrants, 0:12:30.600 --> 0:12:34.400 but even mass deportation of current immigrants, and that really 0:12:34.440 --> 0:12:37.000 has been the saving grace of the US labor market. 0:12:37.120 --> 0:12:40.280 So under a Harris administration, I think we keep rolling along. 0:12:40.320 --> 0:12:44.040 It's pretty much status quo. The composition of Congress is 0:12:44.040 --> 0:12:47.000 going to matter a lot under either scenario. But I 0:12:47.040 --> 0:12:49.480 would say, you know, the Trump two point zero scenario 0:12:49.640 --> 0:12:53.440 is a much more uncertain scenario, much more disruptive, not 0:12:53.520 --> 0:12:55.480 just for the US but for the global economy. 0:12:55.679 --> 0:12:57.679 Judia, I appreciate you. If you it's going to catch up. 0:12:57.720 --> 0:13:10.280 Jidda Karananda of macro Policical Space. We begin this out 0:13:10.320 --> 0:13:12.640 with stocks looking for a firmer footing as earnings from 0:13:12.640 --> 0:13:16.520 ASML spook Tech Investors, the manufacturer of the world's most 0:13:16.559 --> 0:13:19.800 advanced chip maker machines, booking only about half the orders 0:13:19.800 --> 0:13:22.880 analysts had expected and cutting its guidance for the year ahead. 0:13:23.120 --> 0:13:26.000 Joining us now to discuss is Keith Learner of Truist. Keith, 0:13:26.040 --> 0:13:28.920 Welcome to the program, sir. This market was spook yesterday 0:13:29.080 --> 0:13:31.520 by that one name and by those earnings. How spooked 0:13:31.520 --> 0:13:31.839 were you? 0:13:33.520 --> 0:13:34.680 Well, first, great to be with you. 0:13:34.760 --> 0:13:35.800 I don't know that I'm spooked. 0:13:35.800 --> 0:13:38.679 I think listen, it was a bad print as far 0:13:38.720 --> 0:13:41.960 as earnings. But you know, this market keeps changing narratives. 0:13:41.960 --> 0:13:43.320 You know, you think about the border market. You know, 0:13:43.360 --> 0:13:46.319 one month we're growing too slow, heading to a recession 0:13:46.360 --> 0:13:49.840 for the for the US. Next month we're growing too strong, 0:13:50.080 --> 0:13:52.160 and then we're the chips. It's kind of similar, right, 0:13:52.200 --> 0:13:54.680 I mean, about two weeks ago we were talking about 0:13:54.720 --> 0:13:56.880 Micron talking about how much the man there was from 0:13:56.880 --> 0:14:01.080 memory and upgrading their forecast, and then in the stocks jumping, 0:14:01.160 --> 0:14:04.840 and then also context wise in video, you know since 0:14:04.960 --> 0:14:08.040 early September that kind of after that sell off is 0:14:08.120 --> 0:14:11.400 up over thirty percent, semiconductors up over twenty percent, and 0:14:11.440 --> 0:14:13.920 then you have this print and we all know now 0:14:13.960 --> 0:14:18.720 that is ML's biggest customer is China. So listen, I 0:14:18.760 --> 0:14:20.880 don't want to be complacent about it, but I'm also 0:14:20.880 --> 0:14:23.080 trying to put it in context, and I think longer term, 0:14:23.320 --> 0:14:25.440 especially on the AI side, they stole a lot of demand, 0:14:25.840 --> 0:14:29.360 don't forget remember more. One more comment is that a 0:14:29.400 --> 0:14:31.480 couple of weeks ago we were all talking about Elon 0:14:31.600 --> 0:14:35.680 Musk and Larry Ellison fighting over in video chips. So 0:14:35.920 --> 0:14:37.359 again just some context. 0:14:37.120 --> 0:14:39.120 In case you're right. In order in video themselves have 0:14:39.200 --> 0:14:41.080 talked about massive demand, and I think you're right to 0:14:41.120 --> 0:14:45.120 identify China because speaking to that is OUTVMH OLVMH and 0:14:45.240 --> 0:14:49.000 it's big downside surprise, their sales no great, particularly in China. 0:14:49.240 --> 0:14:51.560 So Keith's people start to get excited about investing in 0:14:51.600 --> 0:14:53.440 the rest of the world. When you think about where 0:14:53.480 --> 0:14:54.960 your buss is and I'm going through some of the 0:14:55.000 --> 0:14:58.840 details of your positioning overweight stocks, underweight cash, and you 0:14:58.960 --> 0:15:00.920 maintain a bus to lot caps, so that use launch 0:15:00.960 --> 0:15:02.200 caps in America. 0:15:03.560 --> 0:15:06.640 Yes, I mean we've been a team USA. Talked about 0:15:06.640 --> 0:15:09.000 this on this program for several years now, Jonathan. So 0:15:09.040 --> 0:15:11.960 we're still there, I will say, on the margin, we're 0:15:12.000 --> 0:15:15.080 still you know, emerging markets. We moved out of emergent 0:15:15.120 --> 0:15:17.840 markets completely over the last couple of. 0:15:17.840 --> 0:15:18.880 Years, and that's been the right move. 0:15:19.240 --> 0:15:20.880 Emergent markets have been the performed by a fair out 0:15:20.920 --> 0:15:26.160 fifty percent. We upgraded emergent markets one not to here recently. 0:15:26.280 --> 0:15:29.520 Still not overweight. But I will say, I mean, if 0:15:29.520 --> 0:15:32.200 you look at the rhetoric out of China, I think 0:15:32.240 --> 0:15:34.440 that they're going to still continue to support that stock market. 0:15:34.520 --> 0:15:37.200 It got overheated. They don't want it that overheated. So 0:15:37.240 --> 0:15:39.880 you went up fifty percent, now you're down about fifteen percent. 0:15:40.080 --> 0:15:41.600 I think we're going to get more news and I 0:15:41.600 --> 0:15:44.000 think I think that they will support their markets. So 0:15:44.080 --> 0:15:45.520 on the margin, I think a little bit better. But again, 0:15:45.520 --> 0:15:48.040 bigger picture, we are still team in the USA. I'm 0:15:48.080 --> 0:15:50.320 just making a reference to a subtle change. 0:15:50.440 --> 0:15:52.560 Keith. We were talking earlier about the Bank of America 0:15:52.600 --> 0:15:55.000 fund manager survey and the three pillars that were really 0:15:55.000 --> 0:15:58.360 supporting the incredible bullishness that has seeped into the market 0:15:58.400 --> 0:16:01.440 for the past few weeks. One of those prongs was 0:16:01.480 --> 0:16:04.680 the China stimulus. And yet there's a really concrete question 0:16:04.800 --> 0:16:07.320 here about how much any kind of stimulus will even 0:16:07.360 --> 0:16:10.480 trickle into the global market versus just stay in China. 0:16:10.560 --> 0:16:13.000 How much can that be a pillar of optimism for 0:16:13.160 --> 0:16:13.840 US stocks. 0:16:15.520 --> 0:16:17.800 Well, you know, we didn't need, we haven't needed the 0:16:17.840 --> 0:16:19.960 growth there for the US markets to be in this 0:16:20.200 --> 0:16:22.840 great bull market. So I don't I think this recent 0:16:22.880 --> 0:16:26.400 stimulus is a defense move by the government, but I 0:16:26.440 --> 0:16:29.240 do think it is. It is the most massive stimulus 0:16:29.280 --> 0:16:32.520 we've seen since you know, the pandemic. And I will 0:16:32.520 --> 0:16:34.320 say I think people are looking for like, you know, 0:16:34.520 --> 0:16:37.840 shifts already, like the stimulus acts with the lag mostly, 0:16:37.960 --> 0:16:39.200 so I don't think you'renna see it over night. And 0:16:39.200 --> 0:16:41.680 I don't think it's gonna be this big global stimulus 0:16:41.720 --> 0:16:43.560 that's going to help you know, Europe to the same 0:16:43.560 --> 0:16:46.160 as sense. I think it's much more focused on stabilizing 0:16:46.200 --> 0:16:49.800 the local economy, helping the local stock market as well. 0:16:49.840 --> 0:16:51.840 So I think when people think about the stimulus, I 0:16:51.920 --> 0:16:53.840 don't think it's the stimulus that we've been accustomed to 0:16:53.920 --> 0:16:55.920 over the last two decades for China and the way 0:16:55.920 --> 0:16:57.400 that seeps into the rest of the globe. 0:16:57.600 --> 0:16:59.760 In the meantime, Keith, we were talking about some of this. 0:17:00.160 --> 0:17:02.920 So we've seen overnight not just an ASML, but also 0:17:03.000 --> 0:17:05.159 in Nvidia. And the fact that you're seeing a one 0:17:05.240 --> 0:17:07.600 hundred and sixty billion dollars move on any given day, 0:17:07.680 --> 0:17:11.080 not necessarily on anything related to that specific business, gives 0:17:11.119 --> 0:17:13.520 a sense of how jumpy and volved all specific names 0:17:13.560 --> 0:17:16.119 have been. How do you play that, especially if you 0:17:16.200 --> 0:17:19.080 have a bullish take on it, at what points become concerning? 0:17:19.200 --> 0:17:21.320 At what point is it a buying opportunity for you? 0:17:22.600 --> 0:17:26.080 Yeah, So speaking specifically to Tech, I mean we were 0:17:26.160 --> 0:17:28.920 overweight Tech most of the year. We downgrade in June 0:17:28.920 --> 0:17:31.159 after it got extended, and then in August on the 0:17:31.200 --> 0:17:34.880 pullback we added we added back to it. I would say, 0:17:34.960 --> 0:17:37.000 so we're still positive on Tech. We still don't think 0:17:37.040 --> 0:17:38.920 we're in a we don't think we're in an AI bubble. 0:17:39.240 --> 0:17:42.600 And then with semiconductors specifically, like I said, they had 0:17:42.640 --> 0:17:44.040 a big move in a short period of time, So 0:17:44.640 --> 0:17:46.720 we're staying with that primary trend, which we think is 0:17:46.800 --> 0:17:49.280 up as long as the earnings continue to support meeting. 0:17:49.320 --> 0:17:51.600 We focus a lot on the forward earning estimates for 0:17:51.680 --> 0:17:54.359 the broader sector and also the industry. So far they 0:17:54.400 --> 0:17:56.560 are still stronger than the overall market. Where we would 0:17:56.640 --> 0:18:00.040 change our tune is if we see that rollover. I 0:18:00.080 --> 0:18:02.000 haven't seen it at this point, and I don't think 0:18:02.040 --> 0:18:04.919 ASML is enough to change it. But again we'll keep 0:18:04.920 --> 0:18:06.960 an open mind as we head deep into this earning season. 0:18:07.160 --> 0:18:08.840 This bullish has just hit a bit of a wall 0:18:09.119 --> 0:18:10.480 in the last twenty four hours, and I have to 0:18:10.480 --> 0:18:12.520 say I've identified a lot of bulletners just around the 0:18:12.520 --> 0:18:14.560 table from some of the guests we've been speaking to. Lisa. 0:18:14.920 --> 0:18:17.400 You hear it from Jonathan gallib over at UBS. It's 0:18:17.480 --> 0:18:19.920 a move to the upside in terms of their outlook, 0:18:19.960 --> 0:18:22.240 their price targets. This is from the Bank of America 0:18:22.320 --> 0:18:24.320 Fund Manager Survey. We were sharing it just yesterday on 0:18:24.400 --> 0:18:27.360 this program. The biggest jump in investor optimism since June 0:18:27.359 --> 0:18:30.560 twenty twenty on FED cuts. The biggest jump in global 0:18:30.600 --> 0:18:33.720 growth expectation since May twenty twenty. The biggest jump in 0:18:33.760 --> 0:18:37.760 global equity allocation since June twenty twenty Keith. This came 0:18:37.800 --> 0:18:40.960 from Jonathan Krinsky over at BTIG fear of downside has 0:18:41.000 --> 0:18:44.399 left the building and fear of missing upsiders front and center. 0:18:44.520 --> 0:18:46.920 Yet we think now is the time to look tactically 0:18:46.960 --> 0:18:50.159 at downside risk into month end. Keith, I know it's 0:18:50.200 --> 0:18:52.639 a very short time horizon, but going into the end 0:18:52.640 --> 0:18:54.760 of the month and particularly into November, how are you 0:18:54.800 --> 0:18:55.800 thinking about how to position? 0:18:57.080 --> 0:18:59.520 Yeah, so I think I think kime frames really do. 0:18:59.600 --> 0:19:01.760 Mad of our clients aren't training for the next two weeks. 0:19:01.800 --> 0:19:04.720 But I will say I agree that sentiment is a 0:19:04.760 --> 0:19:06.680 bit of a risk here short term because you know, 0:19:06.840 --> 0:19:09.159 markets are all are all about how things come in 0:19:09.280 --> 0:19:12.960 relative to expectations. Those expectations have increased. You're also seeing 0:19:13.080 --> 0:19:15.199 that in like the put to call ratios, which are 0:19:15.200 --> 0:19:17.840 at the lowest levels since July. I will mention that 0:19:17.880 --> 0:19:21.200 Global fund survey. You know, June of twenty twenty ultimately 0:19:21.280 --> 0:19:23.320 wasn't such a bad time to invest on a short 0:19:23.359 --> 0:19:25.680 term basis. You had a four or five percent pullback 0:19:25.720 --> 0:19:28.200 around that period. But again, remember that was the early 0:19:28.280 --> 0:19:29.840 stages of a bull market. I'm not saying with the 0:19:29.880 --> 0:19:31.879 early stage of this bull market. So I think the 0:19:31.920 --> 0:19:33.840 way I would think about it is on a short 0:19:33.920 --> 0:19:36.000 term basis, maybe a little bit extended. Maybe you get 0:19:36.160 --> 0:19:38.439 at least one or two more hiccups around the election, 0:19:39.000 --> 0:19:41.119 but I would think that would be contained within that 0:19:41.359 --> 0:19:44.560 five maybe to ten percent. Max Side and Keepe focus 0:19:44.640 --> 0:19:46.840 on the underline trend, which is positive. I al say, 0:19:46.960 --> 0:19:48.720 in an election year. By the way, this is the 0:19:48.760 --> 0:19:51.600 strongest election we've seen for the stock market since the 0:19:51.720 --> 0:19:54.919 nineteen fifties. Normally, if you're if you've been up more 0:19:54.960 --> 0:19:57.800 than ten percent heading into into the fourth quarter, you've 0:19:57.800 --> 0:20:00.600 been up every time. Small sample was only seven times, 0:20:00.600 --> 0:20:02.480 so I just want to be clear, So I would 0:20:02.480 --> 0:20:03.919 just say stick with the primay trend. Then we get 0:20:03.920 --> 0:20:05.439 some hiccups along the way. I would use that as 0:20:05.440 --> 0:20:06.600 an opportunity. 0:20:06.160 --> 0:20:09.119 To add how much, Keith, does the gain of stocks 0:20:09.160 --> 0:20:11.200 come on the pain of bonds at a time where 0:20:11.240 --> 0:20:14.359 there's sort of an inflationary question mark underpinning a lot 0:20:14.400 --> 0:20:17.000 of this, and whether we're in a structurally higher inflation 0:20:17.240 --> 0:20:18.880 kind of a regime. 0:20:19.040 --> 0:20:19.600 How much are you. 0:20:19.600 --> 0:20:22.800 Betting on that in terms of the allocation of stocks. 0:20:22.880 --> 0:20:25.320 Really is because bonds look less appealing. 0:20:25.000 --> 0:20:28.280 To you, well, you know, bonds have actually acted pretty 0:20:28.320 --> 0:20:30.400 well this year. They've been acted more like a diversifier. 0:20:30.560 --> 0:20:33.359 I think for the stock market to do well is 0:20:33.480 --> 0:20:36.760