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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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Speaker 2: Terminal and the Bloomberg Business App. Here's an update on
Speaker 2: the Book of America Global Fund Manager survey. It captures
Speaker 2: a big bullish shift and investor sentiment, showing the biggest
Speaker 2: jump in investor optimism since June twenty twenty and the
Speaker 2: largest jump in global growth expectation since May of the
Speaker 2: same year. To dig deeper into the results into the survey,
Speaker 2: Elias Galuo of Bank of America Securities joins us now
Speaker 2: for more. Alius, Welcome to the program, sir, this is bullish.
Speaker 2: My first question to you is it little bit too bullish?
Speaker 3: Hi?
Speaker 4: John, Look, I mean this was really a global fund
Speaker 4: manager survey for the Books. As you just said, you know,
Speaker 4: one of the biggest rides ever in global growth expectation. Look,
Speaker 4: this is a series that goes back all the way
Speaker 4: to nineteen ninety four and we saw the in fact,
Speaker 4: the fifth largest monthly jump in a growth expectation in
Speaker 4: the past thirty years. So yes, definitely a bullish survey.
Speaker 4: And for the first time in the past three years,
Speaker 4: positioning is also equally bullish, and I would say that yes,
Speaker 4: the bulls are very much in control and have clearly
Speaker 4: led the charge in the past month.
Speaker 1: Elias John pointed to this before this idea that Max
Speaker 1: Ketner over HSBC actually sees pretty neutral positioning and you're
Speaker 1: talking about pretty bullish positioning. Which is it.
Speaker 4: You just need to look at a few different metrics
Speaker 4: across the glos for Manager survey to just see bullishness
Speaker 4: is very much spread across the different asset classes. The
Speaker 4: most important, I would say is the FMS cash level,
Speaker 4: again a series that goes back all the way to
Speaker 4: the late twentieth century, and that FMS cash level dropped
Speaker 4: below four percent to three point nine percent for the
Speaker 4: first time since June twenty twenty one. We use it
Speaker 4: as a contrarian indicator when investors are under invested in
Speaker 4: the market, hence the cash level. Above five percent, we
Speaker 4: think that you should buy the market, and when it
Speaker 4: drops below four percent, we think you should sell the market.
Speaker 4: And at this stage, our FMS cash rule says that
Speaker 4: at this juncture, positioning is becoming a headwind. You also
Speaker 4: look at the cross asset allocation. Equities allocation rose to
Speaker 4: net thirty one percent overweight, and that's the largest one
Speaker 4: month jump in equity exposure since November twenty twenty. On
Speaker 4: the other hand, we saw a big decline in bond allocation,
Speaker 4: in fact, the largest one month decline in bond a
Speaker 4: location that we ever recorded. And the velocity of the
Speaker 4: rotation was also quite exceptional. Across markets. EM equities were
Speaker 4: the big winners, with a twenty point rise in exposure
Speaker 4: to em stocker location. And that's really related to the
Speaker 4: China stimulus.
Speaker 1: That's what I was going to ask. Was it really
Speaker 1: just the China stimulus that ignited this rotation, this unleashing
Speaker 1: of truly bullish spirits, or is it a combination of things.
Speaker 4: It is definitely the China stimilus, but it's really the
Speaker 4: combination of three factors. Number one is that the conviction
Speaker 4: regarding global soft lending remains very much intact. Seventy six
Speaker 4: percent of FMS investors still believe the global economy will
Speaker 4: experience a soft lending. Note that the balance of risk
Speaker 4: has shifted to the upside because now the alternative scenario
Speaker 4: is no more hard landing, it's no lending. The second
Speaker 4: big reason LISA is related to a big FED cut expectation.
Speaker 4: FMS investors expect roughly one hundred and sixty BIPs of
Speaker 4: cuts from the Federal Reserve in the next twelve months.
Speaker 4: That's pretty much in line with market expectation. And lastly,
Speaker 4: of course, the China stimulus, which really is seen as
Speaker 4: a GameChanger because when you and I met a month ago,
Speaker 4: China growth expectation had hit a three year low. Fast
Speaker 4: forward to today, than now the highest they have been
Speaker 4: since April twenty three.
Speaker 5: If you're one of those contraris taking on the hard
Speaker 5: landing or no landing scenario, what does that mean for trade?
Speaker 5: These individuals, these investors want to put on.
Speaker 4: Yes, definitely, Who are the contrariants today that would believe
Speaker 4: hard lending is their main scenario and also those that
Speaker 4: would expect a no lending to happen in twenty twenty five.
Speaker 4: But if you are a hard lending believer, then definitely
Speaker 4: you should go a long the thirty year treasury. You
Speaker 4: should pivot into defensives, you should pivot into cash, and
Speaker 4: you should really slash your location to equities and risk
Speaker 4: asset in general.
Speaker 5: Oh yes, we just I want to get your thoughts
Speaker 5: on what are investors, given how bullish they are, what
Speaker 5: are they nervous about?
Speaker 4: We always ask in the FMS the main tail risk
Speaker 4: for according to investors, and this month it was a
Speaker 4: geopolitical conflict. They are still a little bit worried about inflation,
Speaker 4: but definitely less worried about US economic hard lending. So yes,
Speaker 4: geopolitical conflict. And I would say, on the other hand,
Speaker 4: what would really scare investors is that if central banks
Speaker 4: do not deliver the big easing that they are expecting.
Speaker 4: A month ago we said that investors were nervous bulls.
Speaker 4: Now they have just become bulls that are leading the charge.
Speaker 4: I mean, it would definitely still be about geopolitics and
Speaker 4: about inflation.
Speaker 2: Alas you can see that bull as shift big time
Speaker 2: in the Fund Manager survey. Appreciate an update from you
Speaker 2: as always, Sir Alis Kalu, the Bank for America Securities,
Speaker 2: the Bridy, and Julia Coronado joins us now for more. Julia,
Speaker 2: welcome back to the program. It's been far too long.
Speaker 2: Let's talk about the next job's report, not the last one.
Speaker 2: Governor Wallas all come out already and set the bar
Speaker 2: just a little bit lower, given some of the effects
Speaker 2: we could get from hurricanes and a strikeover a Boeing,
Speaker 2: how much low would you think the bar needs to
Speaker 2: be reset going into November.
Speaker 3: Look, I feel like a twenty five basis point rate
Speaker 3: cut by the Fed in November is pretty much I
Speaker 3: would I don't want to say a lock that's too strong,
Speaker 3: but the bar is very high. To deviate from that.
Speaker 3: The data is going to be messy. We all know
Speaker 3: that it's going to look weaker than it actually is,
Speaker 3: and it's just going to take some time to sort
Speaker 3: it out. I think the Fed has seen ena in
Speaker 3: the backward looking data that the economy is solid enough
Speaker 3: that they don't need to worry about it falling off
Speaker 3: a cliff, but nor is it overheating in a way
Speaker 3: that they need to maybe consider a pause. So I
Speaker 3: think we're still look, we're still one hundred basis points
Speaker 3: at least from any concept of neutral. They don't need
Speaker 3: to be in a hurry, but nor do they need
Speaker 3: to be overly cautious or reactive to any inflation print.
Speaker 2: Well, it did put a number on it. He said
Speaker 2: it could be around one hundred k. We could take
Speaker 2: off one hundred k from the number. Are you in
Speaker 2: a similar ballpark with you in the team? Is that
Speaker 2: what you're looking for?
Speaker 3: Yeah, I mean it's hard to calibrate right now. Honestly,
Speaker 3: we're still gauging from jobless claims and other reports about
Speaker 3: how much disruption there's going to be. It's very limited
Speaker 3: ability to see that in advance. So again it's just
Speaker 3: going to take some time. But one hundred k, I mean, certainly,
Speaker 3: given the Boeing strike, which we can calibrate, that sounds
Speaker 3: about right somewhere in that ballpark. It could be bigger,
Speaker 3: it could be small, and then it'll wash back and
Speaker 3: in the November jobs report. So we're just going to
Speaker 3: have to see how that sort of nets out over time.
Speaker 1: Julia, what are you looking for in retail sales tomorrow?
Speaker 1: And I see this especially after bank earnings that demonstrate
Speaker 1: just how solid consumers are and the ability that they
Speaker 1: have to actually continue to lever up.
Speaker 3: Yeah, lever up is an interesting term. Consumers really aren't
Speaker 3: borrowing excessively debt to income. Actually, in the latest flow
Speaker 3: of funds report went down, so this is not a
Speaker 3: consumer that's necessarily relying on debt to finance its spending.
Speaker 3: I think what we have is a dual consumer sort
Speaker 3: of increasing divide in the consumer sector, where you've got
Speaker 3: people that maybe didn't get as big a raise this year,
Speaker 3: they've got a tailwind from inflation, but they're very budget conscious.
Speaker 3: We hear that from retailers, so they're spending but very cautiously.
Speaker 3: And then we've got the upper end of consumers who
Speaker 3: are feeling really good because network is very high, financial
Speaker 3: conditions are easy, and there may be spending a little
Speaker 3: bit more, but they also have the means to do so.
Speaker 3: So on balance, you've got a median consumer that's probably
Speaker 3: a little bit more stretched than they were a year ago,
Speaker 3: maybe a bit more cautious. But on the other hand,
Speaker 3: you've got high end consumers that are doing just fine,
Speaker 3: thank you very much, and that's enough to power the
Speaker 3: economy forward. So we've had a string of very solid
Speaker 3: retail sales reports. There's no signs that were of some
Speaker 3: sort of imminent collapse. I think expectations for the holiday
Speaker 3: season or that it'll be fine, not a blowout, not
Speaker 3: a disaster. So I think the economy is kind of
Speaker 3: in a good, solid zone, which.
Speaker 1: Is certainly what we're hearing reflected by a number of
Speaker 1: Fed members who want to keep it that way and
Speaker 1: want to keep cutting rates in tandem with inflation coming down,
Speaker 1: Which really brings me to this question of why do
Speaker 1: you think that people are so confident about the path
Speaker 1: of disinflation now versus say a month ago. What has
Speaker 1: changed to make the prospects of inflation remaining at this
Speaker 1: level or actually to go higher. Why is that now
Speaker 1: off the table.
Speaker 3: I wouldn't say it's off the table. I would just
Speaker 3: say the chances of that keep going down the composition
Speaker 3: of inflation, and I think President Daily noted this yesterday.
Speaker 3: One area that's really improved this year is supercore inflation,
Speaker 3: particularly in the FEDS preferred PCE measure, really has kind
Speaker 3: of come off that stickiness. It was in the sticky zone.
Speaker 3: It wasn't clear how quickly that would moderate. We are
Speaker 3: seeing progress there. We are seeing progress gradually in the
Speaker 3: shelter component and housing inflation. So just the composition of
Speaker 3: inflation looks a lot better, a lot healthier, a lot
Speaker 3: more like it did before the pandemic, and so the
Speaker 3: risks of it getting stuck too high are just going down.
Speaker 3: And then if you think about things like commodity prices,
Speaker 3: look at how many global shocks we are absorbing, one
Speaker 3: after another, and yet commodity prices really it's the dog
Speaker 3: that hasn't barked this year. It's gone up and it's
Speaker 3: gone down, but really we're still in the same zone
Speaker 3: on energy prices we've been all year. So yes, there's risks,
Speaker 3: always risks, but I think a cooling China has really
Speaker 3: taken the edge off of what we might have otherwise
Speaker 3: seen in terms of input costs coming through from from
Speaker 3: those global shocks.
Speaker 1: Julia, we are less than four weeks, about three weeks
Speaker 1: away from the US election, and a big question is
Speaker 1: US is on solid footing. How different are the scenarios
Speaker 1: in terms of the policy frameworks after November fifth? What
Speaker 1: are you looking for? How different could these two economic
Speaker 1: scenarios be according to your models?
Speaker 3: Yeah, it's an unusual divide for you know, most presidential elections.
Speaker 3: It's a little bit around the edges, right, a little
Speaker 3: bit more tax cuts versus spending. We're talking about a
Speaker 3: very different scenario in a Trump two point zero. A
Speaker 3: Trump two points wouldn't look like a Trump one point zero,
Speaker 3: The staffing wouldn't be the same. The blueprint for policy
Speaker 3: is certainly a lot more extreme than what he was
Speaker 3: able to do in his first term. I see it
Speaker 3: as a pretty disruptive scenario. It would see. His plan
Speaker 3: is to invoke a global trade war from the get
Speaker 3: go and to be you know, turn off that flow
Speaker 3: of immigration that's been quite a tailwind for the macro economy,
Speaker 3: and not only turn off the flow of new immigrants,
Speaker 3: but even mass deportation of current immigrants, and that really
Speaker 3: has been the saving grace of the US labor market.
Speaker 3: So under a Harris administration, I think we keep rolling along.
Speaker 3: It's pretty much status quo. The composition of Congress is
Speaker 3: going to matter a lot under either scenario. But I
Speaker 3: would say, you know, the Trump two point zero scenario
Speaker 3: is a much more uncertain scenario, much more disruptive, not
Speaker 3: just for the US but for the global economy.
Speaker 2: Judia, I appreciate you. If you it's going to catch up.
Speaker 2: Jidda Karananda of macro Policical Space. We begin this out
Speaker 2: with stocks looking for a firmer footing as earnings from
Speaker 2: ASML spook Tech Investors, the manufacturer of the world's most
Speaker 2: advanced chip maker machines, booking only about half the orders
Speaker 2: analysts had expected and cutting its guidance for the year ahead.
Speaker 2: Joining us now to discuss is Keith Learner of Truist. Keith,
Speaker 2: Welcome to the program, sir. This market was spook yesterday
Speaker 2: by that one name and by those earnings. How spooked
Speaker 2: were you?
Speaker 1: Well, first, great to be with you.
Speaker 2: I don't know that I'm spooked.
Speaker 6: I think listen, it was a bad print as far
Speaker 6: as earnings. But you know, this market keeps changing narratives.
Speaker 6: You know, you think about the border market. You know,
Speaker 6: one month we're growing too slow, heading to a recession
Speaker 6: for the for the US. Next month we're growing too strong,
Speaker 6: and then we're the chips. It's kind of similar, right,
Speaker 6: I mean, about two weeks ago we were talking about
Speaker 6: Micron talking about how much the man there was from
Speaker 6: memory and upgrading their forecast, and then in the stocks jumping,
Speaker 6: and then also context wise in video, you know since
Speaker 6: early September that kind of after that sell off is
Speaker 6: up over thirty percent, semiconductors up over twenty percent, and
Speaker 6: then you have this print and we all know now
Speaker 6: that is ML's biggest customer is China. So listen, I
Speaker 6: don't want to be complacent about it, but I'm also
Speaker 6: trying to put it in context, and I think longer term,
Speaker 6: especially on the AI side, they stole a lot of demand,
Speaker 6: don't forget remember more. One more comment is that a
Speaker 6: couple of weeks ago we were all talking about Elon
Speaker 6: Musk and Larry Ellison fighting over in video chips. So
Speaker 6: again just some context.
Speaker 2: In case you're right. In order in video themselves have
Speaker 2: talked about massive demand, and I think you're right to
Speaker 2: identify China because speaking to that is OUTVMH OLVMH and
Speaker 2: it's big downside surprise, their sales no great, particularly in China.
Speaker 2: So Keith's people start to get excited about investing in
Speaker 2: the rest of the world. When you think about where
Speaker 2: your buss is and I'm going through some of the
Speaker 2: details of your positioning overweight stocks, underweight cash, and you
Speaker 2: maintain a bus to lot caps, so that use launch
Speaker 2: caps in America.
Speaker 6: Yes, I mean we've been a team USA. Talked about
Speaker 6: this on this program for several years now, Jonathan. So
Speaker 6: we're still there, I will say, on the margin, we're
Speaker 6: still you know, emerging markets. We moved out of emergent
Speaker 6: markets completely over the last couple of.
Speaker 1: Years, and that's been the right move.
Speaker 6: Emergent markets have been the performed by a fair out
Speaker 6: fifty percent. We upgraded emergent markets one not to here recently.
Speaker 6: Still not overweight. But I will say, I mean, if
Speaker 6: you look at the rhetoric out of China, I think
Speaker 6: that they're going to still continue to support that stock market.
Speaker 6: It got overheated. They don't want it that overheated. So
Speaker 6: you went up fifty percent, now you're down about fifteen percent.
Speaker 6: I think we're going to get more news and I
Speaker 6: think I think that they will support their markets. So
Speaker 6: on the margin, I think a little bit better. But again,
Speaker 6: bigger picture, we are still team in the USA. I'm
Speaker 6: just making a reference to a subtle change.
Speaker 1: Keith. We were talking earlier about the Bank of America
Speaker 1: fund manager survey and the three pillars that were really
Speaker 1: supporting the incredible bullishness that has seeped into the market
Speaker 1: for the past few weeks. One of those prongs was
Speaker 1: the China stimulus. And yet there's a really concrete question
Speaker 1: here about how much any kind of stimulus will even
Speaker 1: trickle into the global market versus just stay in China.
Speaker 1: How much can that be a pillar of optimism for
Speaker 1: US stocks.
Speaker 6: Well, you know, we didn't need, we haven't needed the
Speaker 6: growth there for the US markets to be in this
Speaker 6: great bull market. So I don't I think this recent
Speaker 6: stimulus is a defense move by the government, but I
Speaker 6: do think it is. It is the most massive stimulus
Speaker 6: we've seen since you know, the pandemic. And I will
Speaker 6: say I think people are looking for like, you know,
Speaker 6: shifts already, like the stimulus acts with the lag mostly,
Speaker 6: so I don't think you'renna see it over night. And
Speaker 6: I don't think it's gonna be this big global stimulus
Speaker 6: that's going to help you know, Europe to the same
Speaker 6: as sense. I think it's much more focused on stabilizing
Speaker 6: the local economy, helping the local stock market as well.
Speaker 6: So I think when people think about the stimulus, I
Speaker 6: don't think it's the stimulus that we've been accustomed to
Speaker 6: over the last two decades for China and the way
Speaker 6: that seeps into the rest of the globe.
Speaker 1: In the meantime, Keith, we were talking about some of this.
Speaker 1: So we've seen overnight not just an ASML, but also
Speaker 1: in Nvidia. And the fact that you're seeing a one
Speaker 1: hundred and sixty billion dollars move on any given day,
Speaker 1: not necessarily on anything related to that specific business, gives
Speaker 1: a sense of how jumpy and volved all specific names
Speaker 1: have been. How do you play that, especially if you
Speaker 1: have a bullish take on it, at what points become concerning?
Speaker 1: At what point is it a buying opportunity for you?
Speaker 6: Yeah, So speaking specifically to Tech, I mean we were
Speaker 6: overweight Tech most of the year. We downgrade in June
Speaker 6: after it got extended, and then in August on the
Speaker 6: pullback we added we added back to it. I would say,
Speaker 6: so we're still positive on Tech. We still don't think
Speaker 6: we're in a we don't think we're in an AI bubble.
Speaker 6: And then with semiconductors specifically, like I said, they had
Speaker 6: a big move in a short period of time, So
Speaker 6: we're staying with that primary trend, which we think is
Speaker 6: up as long as the earnings continue to support meeting.
Speaker 6: We focus a lot on the forward earning estimates for
Speaker 6: the broader sector and also the industry. So far they
Speaker 6: are still stronger than the overall market. Where we would
Speaker 6: change our tune is if we see that rollover. I
Speaker 6: haven't seen it at this point, and I don't think
Speaker 6: ASML is enough to change it. But again we'll keep
Speaker 6: an open mind as we head deep into this earning season.
Speaker 2: This bullish has just hit a bit of a wall
Speaker 2: in the last twenty four hours, and I have to
Speaker 2: say I've identified a lot of bulletners just around the
Speaker 2: table from some of the guests we've been speaking to. Lisa.
Speaker 2: You hear it from Jonathan gallib over at UBS. It's
Speaker 2: a move to the upside in terms of their outlook,
Speaker 2: their price targets. This is from the Bank of America
Speaker 2: Fund Manager Survey. We were sharing it just yesterday on
Speaker 2: this program. The biggest jump in investor optimism since June
Speaker 2: twenty twenty on FED cuts. The biggest jump in global
Speaker 2: growth expectation since May twenty twenty. The biggest jump in
Speaker 2: global equity allocation since June twenty twenty Keith. This came
Speaker 2: from Jonathan Krinsky over at BTIG fear of downside has
Speaker 2: left the building and fear of missing upsiders front and center.
Speaker 2: Yet we think now is the time to look tactically
Speaker 2: at downside risk into month end. Keith, I know it's
Speaker 2: a very short time horizon, but going into the end
Speaker 2: of the month and particularly into November, how are you
Speaker 2: thinking about how to position?
Speaker 6: Yeah, so I think I think kime frames really do.
Speaker 6: Mad of our clients aren't training for the next two weeks.
Speaker 6: But I will say I agree that sentiment is a
Speaker 6: bit of a risk here short term because you know,
Speaker 6: markets are all are all about how things come in
Speaker 6: relative to expectations. Those expectations have increased. You're also seeing
Speaker 6: that in like the put to call ratios, which are
Speaker 6: at the lowest levels since July. I will mention that
Speaker 6: Global fund survey. You know, June of twenty twenty ultimately
Speaker 6: wasn't such a bad time to invest on a short
Speaker 6: term basis. You had a four or five percent pullback
Speaker 6: around that period. But again, remember that was the early
Speaker 6: stages of a bull market. I'm not saying with the
Speaker 6: early stage of this bull market. So I think the
Speaker 6: way I would think about it is on a short
Speaker 6: term basis, maybe a little bit extended. Maybe you get
Speaker 6: at least one or two more hiccups around the election,
Speaker 6: but I would think that would be contained within that
Speaker 6: five maybe to ten percent. Max Side and Keepe focus
Speaker 6: on the underline trend, which is positive. I al say,
Speaker 6: in an election year. By the way, this is the
Speaker 6: strongest election we've seen for the stock market since the
Speaker 6: nineteen fifties. Normally, if you're if you've been up more
Speaker 6: than ten percent heading into into the fourth quarter, you've
Speaker 6: been up every time. Small sample was only seven times,
Speaker 6: so I just want to be clear, So I would
Speaker 6: just say stick with the primay trend. Then we get
Speaker 6: some hiccups along the way. I would use that as
Speaker 6: an opportunity.
Speaker 1: To add how much, Keith, does the gain of stocks
Speaker 1: come on the pain of bonds at a time where
Speaker 1: there's sort of an inflationary question mark underpinning a lot
Speaker 1: of this, and whether we're in a structurally higher inflation
Speaker 1: kind of a regime.
Speaker 2: How much are you.
Speaker 1: Betting on that in terms of the allocation of stocks.
Speaker 1: Really is because bonds look less appealing.
Speaker 6: To you, well, you know, bonds have actually acted pretty
Speaker 6: well this year. They've been acted more like a diversifier.
Speaker 6: I think for the stock market to do well is
Speaker 6: really bonds could be stable because what we've seen recently is,
Speaker 6: you know, our work suggested that the fair values are
Speaker 6: right around where we are in the ten year treasury
Speaker 6: right now. So I think I think there's still some
Speaker 6: value in bonds from a diversication standpoint, There's still decent
Speaker 6: income there. But you know where we would get more
Speaker 6: concerned is if if we started seeing yields move back up,
Speaker 6: you know, say above four fifty credit spreads start moving
Speaker 6: out as well, that would be the concern. But where
Speaker 6: they are today I don't think is a major problem.
Speaker 6: And I still say we still see relative value in
Speaker 6: the equity market just because if the economy stays more resilient,
Speaker 6: that should lead to corporate profits continue to move up.
Speaker 6: And that's been the most stable thing we've seen in
Speaker 6: this market, right all the narratives have shifted, the earning
Speaker 6: trends for corporate America have been the most stable part
Speaker 6: of this market.
Speaker 1: Keith, They have to say, there has been a lot
Speaker 1: of bullishness around this table, and it has been growing
Speaker 1: over the past few weeks.
Speaker 6: This from Barry Banister just to give a.
Speaker 1: Dose of cold water and some contrarian thought over at
Speaker 1: Stefault basically saying that the S and P could gain
Speaker 1: another ten percent this year, but then we'll plunge by
Speaker 1: some forty percent by next year, just simply because as
Speaker 1: he said, there is a cost to so much winning
Speaker 1: that basically, when you take a look at valuations, they're
Speaker 1: starting to look pretty heady. At what point do you
Speaker 1: get concerned just about valuations and enough themselves.
Speaker 6: Yeah, listen, I think that is a tremendous analysts respect
Speaker 6: his work went out in that camp. To be frank,
Speaker 6: I mean when we look at like say ten year
Speaker 6: rolling returns or five year rolling returns, not extreme, maybe
Speaker 6: more on a short term somewhat extreme. You know, valuations
Speaker 6: are a tough thing, right because you know, valuations have
Speaker 6: changed over time, because the text sector is now you know,
Speaker 6: thirty percent of the market. If you look back to
Speaker 6: nineteen ninety, the SMP tech sector was about six percent, right,
Speaker 6: And that's where the valuations have really expanded. On the
Speaker 6: same token, that's where the cast flow and that's where
Speaker 6: the profit margins are. So in our view, as long
Speaker 6: as the economy continues to move forward, corporate profits move forward,
Speaker 6: we can sustain somewhat of higher valuations. I think the
Speaker 6: way to think about valuation is it likely caps the
Speaker 6: upside in some of our long term work. We actually
Speaker 6: think long term returns are actually below average on a
Speaker 6: short term basis. I think it's really difficult to use
Speaker 6: valuation to say where the market's going to be, at
Speaker 6: least in the short term as far as the next
Speaker 6: you know, six to twelve months.
Speaker 2: Keith appreciate it, Keith Lennard of Truist. This is the
Speaker 2: Bloomberg Seventans podcast, bringing you the best in markets, economics,
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Speaker 2: else you listen, and as always on the Bloomberg Terminal
Speaker 2: and the Bloomberg Business app. Mm hmm