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We're talking about Bowick shares it Boeing once again hitting some turbulence, down more than three percent as we speak, down more than four percent of its lows today, but right now about a three point two percent loss. This is after the US Justice Department opened a criminal investigation into the mid air blowout of a fuselage panel on a seven thirty seven Max nine in January, something we've been talking about when it comes to Boeing all year, and.
Just yesterday, US Transportation Secretary Pete boodage Edge said the FAA will rigorously assess Bowing after the blowout of that fuselage. Meantime, the head of Delta Airlines telling Bloomberg on Sunday Carrol that he expects from the delays of the yet to be certified seven thirty seven Max ten variant.
All right now, Boeing shares for the year as we said under pressure, they're down about thirty percent year to date. Meantime, For the little contrast here, folks, the eight hors of Airbus tim they're up about eleven percent year today.
Well, you bring up Airbus, Carrol because Boeing stumbles and struggles are an opportunity for its loan major competitor, and that of course is Airbus. That is the topic of a story in the current new issue of Bloomberg Business Week. We have Business Week's assistant managing editor, Jim Ellis joining us here in the studio. Jim, good to see you. Thanks for joining us on this a great story that's
in the current issue of Bloomberg Business Week. To what extent are Boeing's troubles gains for Airbus Because we know that these airlines, they don't necessarily have a ton of choice when it comes to what they're buying. Their pilots are trained on certain equipment, their maintenance crew are trained on things.
It's to change aircraft makers is a big deal for the airline. But we've gotten to a moment now where there's so much, I don't know, a lot of bad news. There is a lot of questioning about the quality of Boeing's equipment right now. That it comes at a particularly bad time for Boeing simply because a lot of people are starting to think of a lot of airlines are starting to think about the next generation of aircraft. And you know a lot of people say, well, you know
things are happening. Now, everybody's going to jump and run to Boeing. It's very run away from gooing. It's very difficult to do simply because you know, as you said, your crews are trained on that, and you've made these multi billion dollar investments. But what's at stake here is the next generation of planes. What happens is that because in the airline business you can use a piece of aircraft for decades, you don't make these decisions to change lightly.
So instead it's time to think about the next generation. And so what air Bus is doing now is they're going to have some room to go ahead and say I'm going to come up with a new plane at a time when Boeing is so so you know, sort of troubled, and so can consumed with thinking about how can it deal with its quality problems? How can it
also deal with its balance sheet problems? I mean Boeing is in the point right now where it doesn't have a lot of financial flexibility to build a new plane, and so Airbus, however, is probably about a fifty billion dollar advantage over it from a dead standpoint, and so they can move ahead and start planning for the next generation and sort of seal this dominance that they're probably gonna have with the aircraft business.
Jim tell us how fortunes can change. And I love how the story starts, and you guys go back to nineteen eighty seven. If we can all remember back then, it's a while. It's a while, but talk about what happened and how that may be set the stage for where Airbus is today.
Yeah, I mean what happened is a lot of people thought when Airbus decided to bring out its A three twenty narrow body airline airliner, the people thought, oh, we're gonna do that. I mean, we've got the seven thirty seven. The seven thirty seven was rules the skies, and they come out with this a three twenty. They have a great party, they have, you know, sort of Prince Charles at that time with Lady Diana. I mean, it's big, big deal, fireworks and everything, and everybody says that's not
going anywhere. You know, you cannot beat them. They and at that time Boeing had ten times as many seven thirty sevens popping out than A three twenties. Fast forward to today, and the A three twenty has become the best selling commercial aircraft of all time. I mean, that's that's a big deal, given that Boeing had commanded that market for so long, and the seven thirty seven has been a major player in aircraft for almost a half century.
How much of that is the mistakes and problems that Boeing has had. How much of is it just folks started to kind of really like the A three twenty and shit their ordering books.
A lot of it is that the A three twenty just sort of came in with a lot of innovations that you know, customers connected with what they call fly by wire, that sort of joystick, sort of all electronic cockpit, the idea that it was a slightly larger plane, which then set off this whole thing of continually making these planes bigger and bigger and bigger and bigger.
I'm measure how big my seed is.
I don't know about you guys, know, it turned out that they were in the right place at the right time. But they are also extremely you know, because they didn't have an older model that they were basically just retrofitting,
they could think differently. They sort of took it and they ran with it, and now they're in a position to think about the next generation of airplanes that can fly on sustainable fuel, that can do all sorts of you know, sort of electronic things in the cockpit, but also can take structures of airliners in a different way. They're planning a plane now for this next generation that has a wing that's shaped like a bird's wing that
can actually change its shape and flight. And also because airports weren't built for these new giant planes that we're building now, they're going to have aircraft with the wingtips that fold up so you can still put it in the same place. But you know, and then we pulled away from the onto the Tormac flip the wings out.
It's I mean, they are basically taking advantage of what they have right now, which is a lot of money as well as not the look of all the stock markets saying, oh my god, you're a terrible company, you know, which is what Boeing has to deal with right now.
Well, just like in the late nineteen eighties when Airbus was the upstart against Boeing, now there's another upstart out there that should have what, for practical purposes is a duopoly between Airbus and Boeing right but may not be forever. Enter what China.
Has KOMAC, China's China's Aircraft Company, which a lot of people in the West don't know because it has only so far built planes for Chinese carriers. But the thing that remember is that Chinese carriers have become major purchasers of Western aircraft. Most of the aircraft flown by the big three Chinese airlines or you know Boeing or Airbus, and however a big percentage of the order books for
these American and European companies come from Chinese airlines. Now China has decided it wants to be a player in the aircraft business. It feels like, why are they giving all this money to the West. They want to basically be able to They want to take that doopoly and make it into a triopoly, and that has got to be a frightening thing for Boeing especially.
Can they pull that off? Outside of China in that wood regulators in the US and Europe, well, you know, foreseeably, uh approve that that's the question.
And part of that is, you know, safety issue. Part of that is just engineering issue, and part of that is a political issue, you know, in the sense that you know, can China build an aircraft that flies? I mean they're doing it now. They're doing it for Chinese airlines and they finally have gotten non Chinese airline though it's to bed air you know, that's but then they are also marketing it now to West aircraft and they
will find some sales there. But the issue becomes one of whether they want to take more of their own cares and sort of persuade them to buy Chinese And if they do that, that takes away a lot of the sort of extra stuff in the art of books of the Western aircraft makers.
I think what's so interesting too is you don't have Airbus coming out and being like snap, you know, we've got this all down because a three.
Eighty, right, and they understand that You've got to be very careful to sort of make fun of somebody else having a problem, because people will just turn it around and say, well, you've screwed up before you made the A three eighty, which sounded like a great plane. You know, passengers loved it, double decker, it's really cool. The issue was it was too late. It came to the market at a time when people decided, well, when airlines decided, we don't need a five hundred, five hundred and fifty
seed aircraft to take people back and forth. Instead, we want smaller aircraft that can take people on what they call long thin routes. Fuel efficiency, that's it, yea and four engines that you know, that plane had four engines. That's a lot of fuel. And so instead two engine is what people want in wide bodies nowadays. And so that plane lost money.
That brings us back to the narrow body seven thirty seven A three twenty, which is certainly the bulk of the market.
Yeah, that's the workhords share of the airline markets where eighty percent of the planes go. And so every you will either succeed or fail based on how you do in the narrow body market. And the reason that Airbus was able to sustain basically a losing program in the A three eighty, you know that ed years before they had planned it to end and didn't make any money for them in the long haul, is because they made
so much money on the A three twenty. Because the narrow body market is the bread and butter of flying, and if they can figure out a way to command the next generation of those and not split that market with Boeing, then they could have dominance of that market for years to come.
At the same time, Boeing can think about its way out of this is to be dominant in that in kind of the next wave as well. Right well, that's of the talent and the engineers.
And that's also the counterintuitive thing. A lot of people say, why should Boying just say, you know, I'm done, I'm done. You know what, maybe Boying can say, I don't care that I don't really have the money to pursue a program. Maybe I should you go ahead and do it now because I don't have that big of an order book. It's very difficult for Airbusts to do anything very quickly, simply because it's sold out in its current eight three twenties all the way through this decade into the next decade.
It's so popular, great visibility, but it also kind of hands.
It handcuts you, because basically you can't walk away from a winner.
Great stuff, great history into kind of understanding what really is a duopoly when it comes to airplanes. Jim ellis, as always, we so appreciate it, Assistant Managing editor our Bloomberg Business Week. Right here in studio, you're.
Listening to the Bloomberg Business Week podcast. Can't Just Live weekday afternoons from two to five pm Eastern Listen on Apple, card Play and and Brout Auto with a Bloomberg Business app or one just love I've on YouTube.
Folks, We've pretty much done with the earnings. We had a little bit of names trickling out last week, but you might recall from the earnings wrap up how Meta is still the king of digital advertising. The social media giant overcame grim expectations for its advertising business, in part due to high spending by China based advertisers and AI generated video content. Users on apps such as Facebook and Instagram spend twenty five percent more time watching videos. So it's a thing Tim as.
Anyone who uses any of these apps, of course, it's a thing well. Companies including Meta platforms, Amazon, Alphabet and many more competing big time when it comes to the space. Our next guest has a unique window into the digital ads space. So let's get to the interview with us. As Mark Zagorski, CEO of the publicly held double Verify, it's a five point five billion dollar market cap company does application software and digital media measurement. Customers of the company, Carol,
include a who's who of corporate America. You got Colgate, Palm, Olive, Ford, Mandoli's Netflix, TikTok Twitter, and that's a cute according to the Bloomberg supply chain function.
Mark, So great to have you here with us. First step, so everyone understands your chief business kind of lay it out for us because you do work with who's who of corporate America.
Yeah, so it's great being here. As you noted, we work with some of the biggest brands on the planet, and what we do is we help them ensure that their ads spend is delivered in a brand safe environment, that it's actually viewable by human and it's not fraud, and that those transactions are secure. So think of us as kind of advertising security software. But we see across social across the open web, across mobile, across connected television.
If there's someplace that has ads, we're measuring or verifying across it.
How do you know if something is brand safe or not?
So we look at a lot of different factors. So if it's video, we can look at the actual video that's running. We can listen to the audio track and analyze it. We can look at the context or metadata around it. So we basically look at all of different contextual clues that we see, and we do this in real time, and we're able to report back to our advertisers whether or not their ads are running environments that are aligned with what they want their brand to represent.
A lot mark has been made over the past year or so about what's happened to the company formerly known as Twitter X of course, and the way that the content on the platform has changed. Is X to you still considered brand safe? Really?
You know, we look across all the different social platforms and you know, we make a call. We categorize content. It's up to our advertisers to determine whether or not that content fits what they consider suitable or safe.
Does it seem like the companies are now saying it's less safe than it previously was.
We have seen more advertisers move away from Twitter than move toward it or X, but there are still advertisers who are putting a hefty amount of spend against it. It's about really threading that needle and X has worked with us in a really positive way and saying, you know, let's give the advertisers to tools to be able to slice andize the content the way they want it.
Well, in terms of platforms that are out there, we mentioned meta, but you know you got alphabet. Where is it that you kind of see clients most likely to put out some kind of a digital ad if you will, and link it to their brand obviously.
Yeah, so we see social and I think you just mentioned earlier video social video is really eating up the Internet right now. About seventy percent of social engagement now is with video short form things like reels, YouTube, shorts, TikTok. They're exploding. They're eating up a significant portion of consumer time as we know, and that means that's where advertisers
are going. So, you know, we try to verify all transactions, whether they're open web social against CTV, but we're seeing more and more of those advertiser dollars and you know heading towards you know, short form social video like TikTok. Yes, yeah, TikTok's TikTok created the revolution, but reels and shorts are really part of it as well now.
But I do wonder just to follow up though, on what Tim brought up about some of the concerns around X and whether it's TikTok. You know, between certainly US China relations that these companies, increasingly Chinese based companies are on regulators and policymakers here in the US on their radar. Do you continue to expect that to kind of play out here and what does that mean then in terms of some of your clients where they're going to choose to kind of put their ads.
Yeah, I mean there's no doubt that advertisers want to be where consumers are, right, and if consumers can't go to one platform, they're going to go to another. Consumers love short form video, So if for some reason a platform loses favor because of government regulations or any other reason, the advertisers are going to chase those consumers. So you know the beneficiaries of a TikTok. You know, ban in this country here is going to be Facebook and Google, no doubt.
Do you think it's realistic that the US could possibly force ByteDance to divest.
That that's a question above my pay grade. I would never want to try to discern on what's going.
But is it on your radar? Like this is a real risk to not just to your business, but to the space.
I mean, I think, you know, for the first time, this is probably getting a bit more serious than it has been in the past. Advertisers are pretty nimble though, you know, if anything happens on one platform, the beauty of digital is they can move very quickly to another platform. I mean, they're looking for engagement, and they're looking for deep engagement, and social video provides that no matter where.
It is, where's the best engagement right now?
You know, we you know, we don't look at kind of time spent on each platform, but we know where dollars are being spent, and dollars are being spent, you know, pretty heavily across all the three that I mentioned in short form video, so across across YouTube, shorts, and across TikTok right now.
So the other another way to ask that question is who who's struggling right now? Where's where's the money not going?
I think you're seeing more and more dollars and move away from open web into more walled gardens, more social into retail media networks, which are really benefiting right now. So you know, powered by folks like Amazon, Walmart, Kroger, Macy's. This is an entirely new emerging area where advertisers, you know, love the data that those retail media networks produce and they're able to see kind of a really strong closed loop performance environment.
What's top of mine is we get ready for the
November election cycle. I mean, it's often running and we know it's underway, and I mean I'm curious about what is the balance if there is one among a brand, a company with high recognition that's looking for the clicks right in terms of people viewing their ad but at the same time not necessarily wanting to be next to questionable content or you know, content that's going to either amplify potentially things that they would rather not be associated with.
Yeah, it's a great question. I mean, you know, political season always brings up a relatively challenging environment for advertisers. They certainly want to be around where people are engaged. People are engaged with political content. There's no doubt about it. However, there's definitely topics that they don't want to be associated with.
And you know as recently as earlier this year, between January and February, we saw a twenty two percent increase in hate speech, for example, and that's just starting off
the year. So we know as the campaign gets more and more cted up, we're going to see more instances of what we call inflammatory news and political content, and that's things like cyber bulleying, it's things like hate speech and misinformation disinformation, So that will heat up, and hopefully what we're able to do is give advertisers the ability to avoid some of the content that they don't want to be around, but still be part of the news engagement,
still be part of the stuff that that folks think is important without having to avoid news or relevant content altogether.
Yeah, it's complicated, hate listen, Mark, I feel like we covered a lot of ground but also scratched the surface in some way. So hopefully you'll come back soon. Mark Sigurski, CEO of the publicly held company double Verify, stuck by the way down about twelve percent so far year to date, by trending a little bit higher in today's session.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station just Say Alexa playing Bloomberg eleven thirty.
Reddit disclosing for their details of what is set to be one of the year's biggest IPOs, with the company and some existing shareholders seeking to raise as much as seven hundred and forty eight million dollars.
And Reddit and the holders are planning to sell twenty two million shares for about thirty one to thirty four dollars each. That's what the social media platform said in a filing today. About fifteen point three million of those shares will be sold by the company and the rest by investors who are Reddit employees.
It's been quite a slog though, to get to this point, so let's get to it. And keep in mind that what Tim just laid out the top of at the top of the range, Reddit would have a market value of five point four billion dollars, So that's a real market cap if you will.
Yeah, let's get it over to Amy or she's a Bloomberg News equity capital markets reporter and she's here in the Bloomberg Interactive broker's studio. Just for context, Amy Snap is about a nineteen point five billion dollar company Meta platforms of course much much bigger.
Is that really apples to apples there?
But look, they're no. I mean it is because these are both supported by advertisers. Like we spoke to earlier in our program, the bulk of the advertising money is going to these short form videos. And then here comes Reddit with essentially a technology and a product that is what at this point almost two decades old, hitting the capital markets.
Yeah, but then a lot of people are looking back at read it and like comparing it to Meta when it was still Facebook, when it first listed on the US doop market, and then that was a time when it was about to go profitable, and then this was the time as well. I read it as well, So there are some comparisons, but it's also like it's interesting to.
Okay, I just want to point this out. Meta platforms now, the company formerly known as Facebook was started in two thousand and four. Reddit was started in two thousand and five. Yes, so they're almost the exact same age, so it's hard. It's hard for me to make that comparison that this is Facebook, you know, pre ipo.
Yeah, so here's what I'm interested in, amy is what is the business that is Reddit? Because Tim, didn't you say you're back in Reddit.
I'm liking Reddit for the first time over the last few months. I find it like, so you're too late.
For the direction.
But you bring it up in the newsroom and people are like, oh, yeah, I'm on Reddit, like you know, like people go to it for answers, right or exactlys and like minded people niche.
It's super niche, Like you can find like plumbers to help you with plumbing, you can find drywall people to help you with drywall, like it's crazy, all right.
A lot of people are sticky users of the platform as well. But then it's also funny how half of the users do not have a lock in. They also, like me, I would not go on to Reddit. On Reddit, google it, and then it will leadst I do. And especially because Reddit has a lot of original content. So like Google with this se O and all will really direct traffic with se The social search.
Engine optimization thank you is that is that helpful to reddits bottom line. Carol and I were going through the s one earlier. They said, we get substantially all of our advertising. I think is the exact of our revenue from advertising.
Yeah, it is tough.
It is tough, but also it also it helps and not helps at the same time, because while it benefits, there are also peers. When Google or Facebook or other places where essentially it will lead to Reddit may change is tools and like the parameters and then that might hit. So like it's good and bad, but also the company
is diversifying itself outside of advertising. So at the end of the day, the company CEO said, everything on Reddit is at the end of the day linked to buying and selling a lot, like whether it's people actually shopping new shoes, yes, but well search for things that will lead to advertising. So if you're buying a new pair of running shoes and then you want to see which model fits a long distance running better or anything in particular, people have really niche as you said, niche needs for
things and then they will go to Reddit. But it's also like the company is diversifying beyond just advertising.
What does that look like?
It's it's selling licensing some of the data that it's been kind of doing for twenty years.
That's what I find interesting in your story the Reddit saying it's in the early stages of allowing third parties to license access to data on the platform, including to train artificial intelligence models. So is it you know, is that what it's going to be all about? That they have a lot of people like Tim and others who are spending some time there sharing their data. That's valuable.
That's very valuable, and especially it's not only just for Google for AI to learn, but also for companies like to actually see what are the trend or hitchebonds, to see what people are talking about like, so there are many uses of those data, but whether.
There is that a business? But is that a business?
Well, they've got sixty million for a one year runway for with the with a deal with Google, so it's actually, yeah, a pretty penny.
Twitter used to do this and make money through selling the fire hose of data, and I don't know if they're still doing it. This is a private company, so it's hard to know. But this was a big selling point of Twitter back in the day that was like, hey, we have real time information they would actually sell to news organizations that makes sense, and they would say, okay, well we have you know, people all over the world
who are monitoring what's going on on the ground. If we see signals of some breaking news event, we can get that to you before other people know about it.
Well, I'm glad you brought that up, because that's what I was. You know, Tim and I were talking the news room about the same and just I'm trying to say, is it like Twitter, like we all loved it or love it? Maybe still x and found it really useful certainly for those of us in the news industry like to find information, and yet the business model has struggled. Is that the same story for Reddit?
It's well, it's similar, Like you said, it takes eighteen nineteen years for it to become profitable, so long run, that's a very long one rate. But then at this particular point in time, there are a lot of like tailwinds. So yeah, it's really up to the investor whether they actually believe in the growth going forward and not looking back and saying you take it so long.
What does it say about the IPO market that this could be one of the year's.
Biggest IPOs, So right now, the IPO market is still pretty subdued so far this year, only seven billion raised, Like this is already like Martians.
So big fish, little pond, little fish, big pond.
Yeah, and then we also had like one of the best few weeks in ACM market just secondary share offering walk trays, convertible bonds. Those were huge and IPO hasn't actually benefited that much. So hopefully this will get people talking and then create that buzz, and I guess read it wants to create that buzz with a direk share sale as well.
Remind us ARMS IPO was almost five billion dollars.
Yeah, and then it went up like one hundred and forty percent.
Since then, So okay, so seven hundred it is. But I'm just saying if that, if this is the biggest IPO of twenty twenty four, then yeah, you know, yeah, it's a respective fraction of what ARM was.
We also had like earlier this year in January there were two a billion dollar share sale as well, amer Sports and also CASSPI, which is just a secondary listing from UK. So it's up there, but not top tops.
Still a subdued market, yes, overall, all right, great stuff, so appreciate it, Amy or Equity Capital Markets to putter at Bloomberg News joining us here in our interactive broker's studio. Thank you, Amy, mark.
A journal.
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It's a good question time. This is the drive to the Globe dot com thing.
Well by around yoga don on Bloomberg Radio.
All right, everybody, just about eighteen and a half minutes left in today's trading session, Carol Master along with Tim's standup, and you just had Charlie uh breaking down the trade here. And you know there's a great story Tim that's on the Bloomberg terminal.
Yes, which one is it?
It has to do with Magnificent the Magnificent seven, right, which is something we talk a lot about it.
They're still all magnificent and well.
JP Morgan's coming out with a call the ranks of Wall Streets strategist playing down concerns about a bubble in US technology mega cap stocks. We're seeing the play down and saying, don't worry. That's growing. Team over at JP Morgan Chase was the latest flag that valuations of the seven tech giants that have powered the record breaking rally on Wall Street are currently lower relative to the rest of the S and P five hundred than the average of the past five years.
Okay, here's what the analyst wrote. Quote, there is a concern over the very strong performance of the Mags seven, but we note that the group is currently trading less stretch than a few years ago given earnings delivery. This is not to say that the group is immune to profit disappointments ahead, but in the case of general earnings disappointments, these stocks could still hold out better than traditional cyclicals that are reliant on the economy. This again not my words,
not Bloomberg News as words. These are coming from the team over at Jpmorton Chase.
The Magnificent seven stocks you know who they are. We're talking about Apple, Google parent Alphabet, Amazon, Facebook owner, Meta platforms, Microsoft and Vidia, and Tesla. These Magnificent seven had driven the biggest gains in the S and P five hundred last year. The benchmark index has scaled all time highs in twenty twenty four, we've seen it continue, but the performance of those megacaps has diverged more recent Tesla Yeah.
For example, Well, right, Carol, just since the start of the year.
Meantime, you've got Ai, Darling and Vidia at a record high, or of has sword to record high, and I think I believe.
Seventy four percent this year.
Yeah, and I think it's your top performer once again in the S and P five hundred. It was last year, and we've seen it a top the list again this year. Apple shares entered a technical correction. We talked about that with Abigail earlier, a technical correction entering that this month concerns about slumping iPhone sales and regulatory pressure, so that one's been under pressure as well.
Okay, let's go get to our drive to the closed guest Michael Sheldon, executive director at RDM Financial, joining us on the phone in Connecticut. Michael, good to have you with us.
How are you good?
Thanks very much, pleasure being with you.
Yeah, it's always good to have you with us. Hey, I wanted to just I don't know if you had a chance to listen to what we were talking about about the Magnificent seven. But on one hand, on the one hand, you have all this uh all these questions from people about whether or not we're in some sort of bubble. And then on the other hand, you have companies like JP Morgan coming.
Out that sacks that are below the technology.
Coming on saying that that valuations are actually okay. How do you see things?
Well, there's definitely been some concentration among the top stocks in the market over the past say the year or so, and that's kind of got turbocharged a little bit with all the excitement about artificial intelligence. So, I mean, artificial intelligence is definitely real. We're probably in the early stages of this. But I think if you look at the valuation, the markets come pretty far over a relatively short period
of time since the October lows of last year. So if you look at the markets right now, we're trading at about twenty one times forward earnings for the S and P, which is about twenty three percent above its long term average. But if you look beneath the surface a little bit, the median stock, so half are above and half are below, the median stock is only trading at about fourteen percent above its long term average. So a small number of stocks are trading it above average valuations.
Many times that's warranted by the growth they're producing. But that can get they can get a little bit ahead of themselves. But there are stocks under the surface that are worth investigating.
And that's the point, right, If you broaden out and really look at the entire S and P five hundred universe, you find out that there's a few that are skewing it once again in terms of valuations.
Yeah, that's a really good point. I mean, we've been looking for the market to broaden out for some time and it really hasn't happened. So, I mean, if you look at if you take a step back over the last ten years or so, ten plus years, which is a long time, growth is outperformed value, large is outperformed small, and the US is outperformed far and for much of the past ten plus years. So a lot of people, ourselves included, have been sort of we've been overweight those things.
But on the surface, we've been waiting for other parts in the market to participate. So I'll tell you one other thing that the RSP, which is the equal weighted S and P five hundred, over the past few days it hit a new all time high.
Yeah, I was just gonna ask about that first.
Time, but that's the first time in five hundred and forty four days, which is the third longest period since nineteen ninety.
So does that tell you doesn't that tell you that it's broadening out now?
Finally, yeah, I think over the past few weeks only if you look at the S and P five hundred versus the equal weighted RSP, for example, over the past one week and over the past one month, the RSP equal weighted indexes outperformed the S and P five hundred. But it's kind of a little bit early to say that's the beginning of a real sea change just yet.
But it's good to see a broadening out, even the early signs of it.
Right Absolutely, parts of the market could we're getting somewhat overheated, and I think it's good to see broader participation, and really that would reflect that the market itself is doing better, The economy is reasonably well, people's forecast four profits going forward is more positive. So those are all positive things, all right.
Broaden out, broaden out, broaden out. This is what we like to do. So the rustle two thousands up only and not even quite two percent this year, How significant or how closely. Do you watch also what's going on with small caps, which are going to be probably more tied, much more closely tied to what goes on in the US economy.
Yeah, that's a big part of the picture as well. So small caps, as they continue to rise, will really play catch up. And the question is do you want to be in the market leaders, which are the large cap growth stocks, or do you want to play for a rebound. So we think you want to have your sort of you want to have some diversification because again, if the RSP equal weight it is doing better, that
means people are more optimistic. They're willing to sort of maybe get involved in some of the parts of the market that have lagged so far. So it's definitely too early to say that small caps have started to outperform. You also have to keep in mind if you look at the Russell two thousand, for example, more than forty percent of those stocks are currently unprofitable, so you do have to be wary of that.
Hey, Michael, hell, how do are we for a pullback right now?
I wouldn't be surprised to see some sort of pullback or correction over the next few weeks. The market's been up sixteen of the last nineteen weeks, for example. And if you look at things like sentiment surveys, for example, like the American is Asociation of Individual investors or intelligence the investors' intelligence numbers, they're kind of frothy right now. So I wouldn't be surprised see somewhat of a pullback
or a correction over the next few weeks. But I think you have to keep your sort of eye on the ball. As long as the economy is doing reasonably well. People have jobs and they're spending. Inflation is trending lower, which is important. It's not going to happen. It's not going to come down every month, and the earnings outlook continues to be positive. I think that will help the market over the intermediate term.
You mentioned inflation tomorrow an important CPI report, another inflation print which we know came in hot last time. How much of what comes if it comes in hot again tomorrow, how much of what we're hearing from you today could change a little bit And just kind about thirty seconds.
Yeah, I think if the inflation numbers really come in higher, say two tenths or more, I think that could be a short term setback for interest rates and the markets. But some of that's already reflected in the market, the fact that that inflation's not coming down as quickly as expected, and you're seeing that in lower interest rates and a lower dollar over the past few weeks.
I think, all right, conn of leave it there, Hey listen. Always appreciate it, Michael, take care, I have a great week. Michael Sheldon, executive director of OURDM Financial Group, joining us on the phone here.
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