Bloomberg Markets Special Simulcast Day Five

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News. This is Bloomberg Markets from New York to our audience worldwide, a global simulcast right now across Bloomberg TV, Radio and our YouTube platforms. Remain bostick here alongside Tim Stanivik and Greedy Group Dick Year on this New Year's Eve. Happy New Year, guys. Hey,

Happy New Year, do you too? Yeah, they're already celebrating somewhere right I think Pakistan right now, just hit midnight, So congratulations to all our friends out there in Karachi. Hey, um, if we were going to go back to January Roman, Yeah, SMP five hundred. Uh, the estimates from analysts. They're saying, okay, the most bullish case back in January about forty four hundred points. Yeah, look where we are now, just shy of forty eight hundred. Yeah, forty eight hundred here on

the SMP five hundred. You talk about the gains that we booked this year, I mean, look, three straight years of gains on the SMP five hundred, double digit percentage gains the nastac keep in mind, I think we're something like six straight years now here too, So Crety, this has been a remarkable bull run, or a certain leg of whatever this bull run has been, despite some of the weekends that we're seeing, at least on this final day of the year. Yeah, remarkable is I think the

really the key word there. And you just heard him talk about that forty price target for the SP one. Well what's interesting is that's also the low end of the forecast for two as well. Essentially, the message here is that the stock market can go anywhere. Just because we had those really monstrous games in the last three years does not mean that they'll sustain. But hey, if you have tech on your side, why not have that pretty bullish case as well. Yeah, and I'm big concerned now.

Of course there's a lot of the catalyst sail get us this gain on SMB five this year, those some of those catalysts might not necessarily be around in Let's get some perspective from our first guest here helping us kick off the show, Jay Hatfield. He's Infrastructure Capital portfolio manager and chief investment officer. J Let's start off with and what potentially could actually be an impediment for this market.

Thanks for very Happy New York to to everyone. Well, as usual, the really critical judgment to make is what is FED reserved policy going to be. We're quite bolish about FED policy. If you look the FED is caused. There's been um nineteen tightenings of policy since World War Two. Eleven of those resulted in a recession, eight of them in a soft landing. But we do think that the

FED got religion over the last couple of years. They've abandoned their single target of two, which it is completely uns substantiated by the way they just made that up UM, and now they're more flexible. Plus they're gonna have more Biden appointees, So we think that they'll focus on their dual mandate. They'll stick to the dot plot, just raise rates three times and not start quantitative tightening, which is

a disaster for the market. That's what happened in two thousand eighteen because the Fed was shrinking the balance sheet. Right now, they're not slated to shrink the balance she just stopped the excess liquidity j what is you know, We've been talking to a lot of analysts about the week about many of them agree the biggest risk risk

is a misstep by the Fed. What do you think the biggest risk is, Well, I think that I mean, obviously that is the biggest risk, But what goes along with that is really just disinflation accelerate beyond everybody's expectations. So a couple of months ago, our calculations were the inflation with run rate was double digits because keep in mind the BLS does not properly mark rents to market

and energy inflation was raging at the time. So if inflation prints hot, then I don't know if it's a policy mistake, but the Fed may have to prioritize inflation reduction over employment. So that's really the key risk, is accelerating inflation, because I do think that you can't increase the money supply by and have no inflation. That's really, in effect what the transitory theory of inflation was so

key risk is is double digit inflation. I would say, so, ja, what happens when the opposite of what you just said takes play? Let's say inflation, which is really where the FED is throwing all their firepower at right now their focus. As you mentioned, well, what if inflation has already peaked? What if we're already dealing with the supply chain issues, We're dealing with the omicron variant, We're also dealing with commodity prices that have peaked and perhaps coming back down.

What's the trade there if the labor market turns out to be a bigger problem than inflation, well, and that that that actually, I think that could be worked out fairly well because that would, you know, really imply a soft landing, so to extent that their economy is slower than we expect. That I wouldn't think that would be a disaster for stocks at all. And in fact, also interest rates would probably stay relatively stable, So um that

scenario I think would be positive. We're projecting three to four percent growth for a number of reasons, one of the biggest being that the US has a ninety percent cost advantage over the rest of the world in electricity and natural gas, So we don't see that scenario. But I don't think that would be a disaster because it would give the FED more headroom to not raise rates

and not do quantitative tightening. Yeah, I mean, so much focus on the FED this year, and it's a fact that it's going to have on equities and I guess to a certain extent, on the bond market here, But what about some of the other risk assets. I mean, we talk about all of the sort of push out onto the risk spectrum because of that implicit FED support here, whether it's cryptocurrencies, whether it's some of the real estate

and private equity deals out there. How does that how does some of those trades are affected by potential tightening here by the FED. Well, I think there's there's a great implicit point there remain, which is that people talk about interest rates being the key dynamic that drives the market, but you know, interest rates are so low the key dynamic really is the equity risk premium. So that's the you know, the premium plus treasuries is what the required

rate of return is. So when the Feds reducing liquidity, that rises, so that disadvantages riskier stocks um like a Tesla has a two beta, and it advantages more conservative stocks like utilities that have a beta or sensitivity the market about point five. So we think that the DAL is going to outperform next year the SMP significantly, so the reverse of this year, because those value stocks will outperform the high momentum stocks when the equity risk premium

is rising sliding. Okay, hey, j we were talking about year to date what the major industries have done. The doubt up closer, the s and P five fundered handily out performing over what's your estimate for how the SMP five found it is going to end. Well, we're optimistic

that Dow will be up ten percent. I would see the SMP could be closer to flattish your up five because I do think that will you know large percentage of the SMP I mean obviously the easiest one to see, of course, as tests that just two but are trading at huge multiples five times in their case, so those stocks are likely to continue to underperform. Or even go down as that equity risk premium rises and it hits those high high value stocks. And we're also barish about

cryptocurrencies for the same reason. They're about twenty five starn correlated with inflation expectations, so to the extent that expectations drop than that could hurt cryptocurrencies as well. J Hatfield of Infrastructure Capital, thanks so much for joining us on the simulcast. We really appreciated. Hey bearish on crypto. You know, we were speaking earlier to some folks on on Quick take Stock today, UM one from US Bank and one from City as well. Uh asked the same question about crypto.

No place for crypto and their portfolio is at least two Yeah. I mean, look, I mean we've heard from a lot of folks who say that kind of the correlations that we've seen between the crypto sphere and I guess the real world here, that that's starting to catch

up with a lot of those crypto investors. I'm not sure I really buy that, because, I mean, when you start to look at some of why people are sort of invested in this and the thesis behind it, it seems like at least there's some sort of degree of support at least on the downside here for thousand right now, right, you know, Imaan, what was the other thing he said? He said that value is the trade that he really bets on going into two. That's interest saying it's a

contrarian take because that's a traditional post recessionary play. That was one trade, not necessarily the Wall Street CONCESSUSO. Yeah, I mean, I think we talked about this earlier this week, the divergence that we've actually seen between some of those value and growth stocks in the second half of the year. Remember, the Russell two thousand was a massive out performer in the first what two and a half three months of the year. It was something like a fifteen percentage point

difference between the Russell and the SMP. There's still a fifteen percentage point difference between the Brussel and SMP, but it's flipped on its head. Right now. Welcome back to our simulcast of the close on Bloomberg Television, Bloomberg Radio and on YouTube. I'm Tim Stanivk, joined by Creedy Gupta and Romaine boss Stick. We are just over an hour away from the equity markets closed on this final trading day of the year. Let's bring in a Bloomberg markets

Abigail Doolittle with an update. Hey have a go hate him. Well, you know, on this day, we're looking at stocks fluctuating between small gains and losses. The SMP five hundred the last moment that I looked slight, slight gain. So perhaps we'll see in the seventy one record close of the year.

But again small moves on the day. On the year, though, it's a different story of massive games for the SMP five hundred the NAZAC one both up more than twenty seven percent, the daw up about eighteen percent, the Russell two thousand underperforming a little bit, up just fourteen percent, if you can say up just because, of course, is a double digit game, confirming the risk on tone bonds down in a huge way with that ten year yield

backing up nearly sixty basis points. Yeah, Abigail, a quite day in stock market, at quite day in the bond market. But it seems like there's some action in the commodities market. I'm looking at oil down two percent, uh at the commodity's close. Why see such a divergence? There probably the fact that oil into today creaty had been up. I believe seven days in a row, a big winning streak, the best longest winning streaks since February, so just cooling off a little bit. Plus oil on the year a

huge rally up. I believe nearly six w T I crewed on the years best year since two thousand nine, so locking in some profits. Also it could reflect to some concerns around the omicron. Will it dent the global growth picture? In two? One of many questions for us

to answer in the new year. All right, Abigail Doolittle given us a quick update here on where we stand as we count down, of course to the close of trading on this day, and of course, of one a big story in of course, we're all the cyber attacks that we talked about, ransomware attacks and other types of cybersecurity threats out there. A lot of companies really trying to beef up their I T systems and governments for that matter too, to protect themselves. Our next guest knows

a lot about this, don't he answer him? He's e set chief cyber threat officer joining us right now, Tony. Uh, you know, I guess the big question everyone wants to know is how if it all, can you stop this? This seems like it's just become its own animal, whether it's organized gangs, whether it's governments, or whether it's just sort of lone wolf types who just want to you know, mess around. Uh and you know, basically just screw something up.

How do you stop this? How do you guard against it? Well, unfortunately, this is a business and as you just said, it comes from a series of different places. But cyber criminals are making huge amounts of money unfortunately from holding companies to ransom, and companies are handing over that cash. Realistically, I mean you're now seeing legislation come through of responsibility

to disclose. I expect that in two maybe to become not just disclosed after the incident, but disclosed during the incident. But to me, you have to start regulating in some way or locking down cryptocurrency in some manner and actually cut the money off. How would you do that? I mean the idea behind that, of of course, and we look, we know that you can actually track cryptocurrency. We saw the government do that in the case of the Colonial pipeline ransom that was paid. Um, how do how do

you do that? Though? How? What? What what do authorities have the power to actually do to help prevent this. Well, isn't this an investment just like anything else, It's an investment tool. So therefore, if I walk into any bank in the US and try and open account, I have to identify and be my identify. Identification has to be verified. If we were verifying globally, I mean this is a

global issue, not a specific country issue. If globally, to hold cryptocurrency you have to validate identity, then you cut the money supply off. Tony, how much of this latest push to really kind of ramp up some of that cyber security comes from geopolitical tensions with say China, would

say Russia or even Ran to that matter. Well, certainly the push to have better cybersecurity, I think it's become political because when you mentioned colonial pipeline earlier on, I mean that any any cyber crime that creates a line outside of a gas station is going to have political effect because no politician can have their citizens affected by this type of issue. But we're seeing you know, Interpol for example, back in I think there was November made

a series of arrest but that covered seventeen countries. There was seven arrests for people that responsible for two hundred million in ransomware payments. So you can see this is not a particular country. This is a globalish and I think until the world comes together and actually has a summit on stopping cybercrime and puts all the right people in the room, then we're unlikely to see a lot

of movement or a lot a lot of decrease. As you talk about us coming together to a certain extent, it feels like we're all sort of fracturing a part here. Seems like certain countries don't trust other countries. You know, we've obviously had a lot of concerns in the United States about are buying certain types of equipment and software from China and other countries as well. Here. I mean, where do we sort of find that middle ground. Well,

that's a tough one. And just before the holiday period, I mean we saw an additional issue with a log for j so, which is a small piece of code that had a vulnerability in it that's used as it's open source, it's free code. A lot of vendors used that in hardware and so fear and services and companies you use it. So we see issues in supply of that time hitting and unfortunately they're huge. When they do hit, companies have to scan and find out where they use

this code and then try and mitigate against issues. So it's a glocal it's a global issue that requires a global response, and countries coming together in groups is great. But until you bring every country that has a significant part of this into one room, I think you're you're not grasping the whole issue, hey, Tony. Oftentimes when we read about these saber attacks, we read that sabercriminals were able to penetrate a system based on an employee maybe

clicking a malicious link or downloading a malicious file. So I always ask to like to ask people in your position about what individuals should do, how we should protect ourselves. Give us some best practices. Well, firstly, don't trust anything that lands in your inbox if it has a link, if it's to an external site for example a retailer or or something else, or it's asking for creditor verification of credentials is likely not to be real. So just don't trust links that land in your inbox, Go to

the website, log on manually. And the problem is is people trust those things. They go in, they give away their credentials, and hey, the cyber criminal has access. But we've also seen other issues throughout twenty one where vulnerabilities in software have allowed cyber criminals to get access in other ways. But it's you are right, employees, and unfortunately human behavior. We like to click on things and we need to be the first line of defense, all right,

so be careful when you click. Tony n Scum, the set chief cyber threat Officer, Tony, Happy New Year. Thanks so much for joining us on Bloomberg. Appreciate it. Well to him, we do have some breaking news here. I'm really sorry to report that Betty White, one of the most endearing and enduring based on televisence, she has passed away at the age of ninety nine at her home in Los Angeles. She was one of the just key faces when it comes to Golden Girls when it comes

to television. We are very sorry to lose her. Uh and I mean, I'm I'm still in shock, and I imagine you all are all are as well. Just shy. Ever, one birthday, which would have been on January seen a pioneer too, I mean not everyone of course knows her from Golden Girls, but what she did back in the sixties with their talk show and with their sitcom here being one of the first women I believe to even have full production control, full creative control over her own

show at a time where that was just unheard of. Yeah, And I think what's also particularly remarkable about her career is just how long it went, and well into her nineties she was doing commercials and you know, she was on Twitter too. Yeah, and like one of the few people out there that I think is beloved by everyone. Right, we live in such a divisive world. At least there's somebody I think we can all agree that we certainly love.

We say goodbye to miss Betty Way. This is Bloomberg Market's a special edition here simulcast across Bloomberg TV and radio and YouTube as well. Two pm here in New York, eight pm in London, midnight out there in Dubui. Happy New Year to everyone out there. If you celebrate, are you gonna do? You know, Tim, you're kind of a grinch, right, Yeah, well actually so my sister actually is flying in so we're doing something. But yeah, I've been a real COVID grinch to be honest. Yeah, I think a lot of

people are guys trying to hunker down today. A few people, I guess are gonna brave uh the outside and go out to their bars or out the time square. We'll see. As far as the markets here, I don't think anyone's really training right now. The bond markets already closed down here. The equity markets they're still open for reasons that I still haven't had explained to me. I'm told, Uh, Tim tells me that there's a whole story about why we're here today. But nevertheless, there are is an hour a

left and training here. Apple Uh not gonna hit that three trillion dollars here in unless there's some major turnaround here in the final hour of training a Carnival corporate. Most of the cruise lines lower here as well on a daily basis, Ford one of the few bright spots

out there, up about two percent. Right now, Let's jump over to Abigail Doolittle, who's taken a closer look at what's going on around the Market's Abigail Well Romaine with those small moves on the day, with the major indexes fluctuating between small games of law, sayes, Let's go right to where the real bright spot is, and that of course is the whole year of one a real risk asset rally, with the SMP five hundred of NAZAC one both up more than twenty seven percent, the socks with

that chip index up more than Tech up about thirty three. Small cap a laggered but still up about fourteen percent. All of this, of course confirmed by the fact that haven bonds are down on the year, the ten year yield backing up about sixty basis points. Interestingly, though the two year yield backed up just a little bit more so, the yield curve has actually flattened a little bit uh and in the case of the five thirties even more so. But as for the risk rally, oil up fifties this year,

the Besson's two thousand nine is really pretty incredible. The risk picture for this year. Yeah, Abigail, let's just talk about that. The recovery trade in was supposed to be the trade that really took off. You're supposed to see the small caps in in travel stocks and commodities. To your point, can we actually expect to see that in two or is that officially in the rare view mirror. I think we're gonna have to see what happens with this, oh Macron, and also with the economy, the influence on

the economy. It seems that most I just believe it won't be the biggest deal. Relative to this year. Sector wise, it was really a nice blend. You know, you have energy, which of course is an icyclical and growth area up the most of Interestingly, another official growth sector, real estate ups strongly. Tech financials on bottom very interesting this year. The defensive sector such as utilities and staples. Often when that happens, you can see those reverse into next year.

We don't know if that's the case, but I believe in energy was the worst sector this year the best, So if utilities and staples end up being on top next year, it could turn out to be a defensive year. Way too early to say that for sure, though. All Right, Abigail Doolittle giving us at up to date three pm

in New York. He here ed Francesco CEO of International Assets Advisory, joining us right now to talk a little bit more about what's going on in the market today and more importantly, where he sees the market going in two ed, Abigail was just showing us, uh, some data showing that basically every sector in the SMP five hundred up ten percent on the year or more. Do you see those types of games replicating themselves in two or roming first, good afternoon and happy new year to year

in your colleagues, thank you? Uh, I really wish we could say that, but we have international assets. Believe that one is now in our rear view mirror A year, a year and a half ago, at I A A, we were looking for markets to respond just like they have. I remember talking to people a year, year and a half ago and predicting thet five thousand and fifteen thousand days that from five thousand SMP, and they all thought I was speaking crack um. It turns out we were right.

But we also anticipated inflation. We started calling information in tributary and now we get so many mixed segments from the market. We believe that when you look at the job recovery, you know, I have much job creation we have in the United States. The best way to describe its feeble, but at the same time it was feeble. We're having a record loads an unemployment. We still have a huge supply chain problem. We don't see that being

solved anytime in the near future. And yet we have all time highs and ear time all time highs and all the markets. So what we see for two is that in the short term, they're very short term. We continue to see the markets still being strong, but we expect that ultimately the negatives are going to outweigh the positives, and that this is going to have to be coming year, a very defensive year, a defensive year, risk off year.

Would you say, I think there's a real potential temp that six months from now on nine months or now, we're looking at a major correction, and we don't view corrections of you know, five or ten percent, fifteen percent year and I A we're talking that we can see a twenty thcent correction. We're really expecting it's a possibility. That's a very contrarian call for a very bullish Wall Street I should say, probably about the retail crowd as well.

I'm curious, though, how you play tech into all of this, because at the end of the tech lazy s and P five hundred two record highs, but it also leads those corrections. Is that essentially a call on tech? So that's a very good question. We think techt is gonna continue to be strong for a couple or more months, a few more months, but that the chickens are gonna

come home to roost. And when that happens, you know, go back to the chart that we just had up there a little while ago where you showed tag your realty and so forth, and you guys talked about it converting next year. That's exactly what we think we're gonna say. We I mean, the last few guests that you've had been talking about all the things we're concerned about, talked about that we talked about. I've heard conversation about cybersecurity.

That's something we're extremely concerned about here at i AI. So all these conversations that's right there. I think we're going to see a real and version of that chart by the end of next year. Well a part of that, I guess what's going to determine that, of course, obviously over all the pace of the economy, not only here in the US and abroad, but more importantly, the policy of response that we get, whether it's monetary policy with the FED or physical policy, whatever levers could be pulled

in Congress or in the Y House. Here, do you see any sort of potential for policy makers too, maybe I guess guide us to that proverbial soft landing. I mean, there's always that potential. But quite honestly, whether they're Democrats Republicans, I as well put a lot of faith in stock in politicians. We think that the least they do, the better off we all are. And we always used to subscribe that at old congressional effect theory. Those of you who are not familiar about it, you should go read

about it. There's now upon it. So while we'd like to be hopeful that they could, we're not anticipating that they will. And one of the things that we're really interested in is, you know, I've been in this industring now for forty plus years, and there was always this old average about how the market is really just a reflection on the emotional attitude of investors and the people on the street. Well, I think there's been a real decoupling of that in the last year. I've never seen

so much pessimism amongst the average people. I'm with them, the average citizen in this country and around the world. We're scared we're right in the future, or we're gonna have a worse version of COVID, what's gonna happen to

the economy, what's happening with the inflation? With all these questions and just sort of pole just about an hour ago the latest poll showing that you know, well over fifty of the country is pessimistic about what's going on with the economy and health and so forth, and get the markets keep going to new eyes. I don't think this, this decompany can continue. Okay, So yeah, I want to go back to that what you said about a twenty

to thirty five percent correction. I think because creates spot on by pointing out that that's a really contrarian view, especially with people we've talked to you this week. As we look ahead too, well, what is that single event perhaps that that brings on that correction, because there there is something always that that does bring on a correction. Right then, there's so many events that could happen. I can't even begin to tell you. You know, inflation can

continue to be much worse than anybody anticipated. We can have a geopolitical event. We could have a fourth wave I'm gonna call im acron the third wave of COVID. We could have a fourth wave of COVID people are. You know, we talked about whether there's people looking at a transaction where people following something something continues to go on, we start to get fatigued. People are really really fatigued on COVID. Now people just want to get back to

a normal way of life. But if you know, in three months or six months, as we're going through this third way, we have a fourth wave of COVID, I don't know what that event is going to be. I just see so many potentials, and we here doing our analysis and internationalist and see so many potentials in the general sentiment of the investing public being so negative that we think something's gotta given. I can't tell you exactly

what that's going to be. Alright, A big thank you to at CO Francesco CEO of International Assets Advisories joining us at happy New Year correction. I still can't get beyond that creedy and uh and romain, considering it's so different than what we've heard from everyone else this week, but not that uncommon, considering that we've had a really

banner year with no correction. It's not even a technical correction of ten percent, so it may not be that wild of a call, and there's a lot of concern too. I mean, when you talk about monetary policy, how do you reign and inflation without tamping down economic growth. There are some people that said that effectively you have to almost create a recession. So if people do believe in that, I can certainly see why a draw down could be

a little bit more realistic. This is Bloomberg Market's a special edition here simulcast on Bloomberg Radio and TV as well as YouTube. Romaine Bostick here, Tim stunofic Crety Group to counting you down to the closing bells on this Friday afternoon, final trading day of the year, with just about eleven minutes or so away from the end of the trading day, and you talk about the performance that we've seen here going back all the way from the

start of the year to the end. The Philadelphia Semiconductor Inducts having a wonderful year up about here on a year to date basis, energy though that's your out performer among the eleven SMP sectors. Is actually the energy sector that's actually outperformed here up about forty eight percent year to date. And when you look at the SMP subsectors SMP groups here the worst performer. You're gonna find that among the telecom companies A, T and T for rising and the like, all lower here on a year to

date basis at index down twelve percent. And guys, I want to highlight the bank stocks here, because everyone keeps talking about the underperformance of bank stocks. The KBW Bank Index is up about thirty five on the year, the best year that that index is seen going back to seven. Even the k r X, which is a regional bank index,

having its best year since seen. So for all the handwringing about how some of the bank stocks haven't really kept up, you're sitting on some pretty healthy games JP working up on a year to date basis, Bank of America returning forty seven percent. If you can believe that. Guys. Yeah, it's really crucial when you're talking about the banks in particular because the the relationships he yields is what's been

so crucial. If you start to see yields continue to drop in two continue see those treasury yields really suppressed, does that show up in those bank stocks. But let's not forget what a banner year it was for M and A and just the huge games that the banks were able to get just in terms of fees from spacks, from p o s and the M and A that we talked about yesterday. So the question is does it continue into That's the big question here. And let's about

bring in our next guest here, uh Matt Maylie. He is the chief market strategies for Millerity back joining us right now. And Matt, you know, let's talk about kind of some of the catalyst for the market. I mean, we came out of twenty and that was basically all about fiscal policy that kind of fed into the least the first portion of one. But now as we get towards the end of the year here and into two, the focus seems to be squarely on monetary policy and whether that's going to be a tail win or a

head win to further gains in this market. Yeah, there's no question. I mean one of the things we have to where we have to realize is that this you know, this head win I think it's going to be. Uh is you know, we're going from a situation with a FED in the past whenever they've gone or not whatever, but usually when they go from to a tightening policy. It's usually from a neutral policy in this situation we have when they're going from an ultra accommodative policy uh

to a tightening policy. And again it's not it's not like they're slamming the brakes in a wait in a major way. But I think we'd all agree. But I mean, you can just see by the level of the stock mark. I'm sorry, the level of valuations in the stock market. It is expensive. I mean, we all know that in the summer of two thousand twenty that this all the stimulus push the stock market well ahead of the of the fundamentals. But we felt the fundamentals would play catch

up as the COVID problem eased off. We did get past the emergency. The problem is we kept the emergency stimless on and so we were never able to fully catch up. So now the stimulus is gonna have uh a pull back a little bit. I think it does have to be the best case scenaris we meet somewhere in the middle, but usually it's it's at the lower half of that middle. I'm afraid history is any good. But what other option does the FED have going into two as inflation hits forty year highs and we continue

to see prices rise higher. Yeah, I agree. One of the biggest fallacies I think out there is that people saying, you know, well, the FIT might make a policy mistake. And when they say that, what they're saying is that they call a mistake a policy mistake is being causing the markets to go down. Well, that's not about the FEDS that I mean, we've kind of gotten used to them, you know, having the FED put the power pot that

bernet used to be, the Bernanke put etcetera. Uh, but you know they've I think they've lowered that safety net and and they're doing the right thing. You're you're absolutely right there doing the right thing. Uh. The problem is sometimes the FED out being bulker. Certainly did it. Uh. Sometimes the FED has to do some things that are a little bit painful over the near term so that

things will work out over the long term. I mean, our parents did that when we were kids until all the time, and this is something we have to do now and and again, you know, corrections, even deep ones are are are painful, but they're also normal, they're healthy, they're part of capitalism, so people should embrace them, not fear them. Matt, you said the C word correction, and

my ears perked up immediately. I really want to ask you about that, perhaps a correction in two We just had a guest who was calling for a twenty to thirty five correction in the SMP five next year. My question to you is, if we do see a correction ten percent, however much, do you start to see dip buyers immediately hop in and recover those gains within days. That has at least been the pattern that you've seen in at least the shallow pullbacks that we've had in

the SMP five hundred. Yeah, and but I think it goes back to what we're just talking about with the FAN. I mean, one of the reasons they were successful in doing that is there was so much liquidity slashing around in the system. Well that's going to go from a hundred and twenty billion dollars a month from the federal Reserve to zero in just a couple of months. So I think those buy on the dips are going to continue to try it, and this time they're gonna get burned.

I mean, the history is shown by the dip isn't a brand new thing that has worked, you know this year, it worked very well in many other years. And then finally when that we do see the correction, those guys

get burned. And that's what happens is that is that you know the situation, really they buy and by by and then finally said well this isn't working and they dump and you get a big washout move so and and then the thing you're asking about, a deep correction like that or a bear market where you want to call it, uh, it is possible because you know, one of the things that all this steamus has done is helped investors at risk and especially at leverage. With you know,

margindet all time high. It's starting to roll over as people d risk and especially as the d leverage, and we could see it an outsized decline. But again, if you have a little cash on the sidelines, you'll keep your head. When the market is getting clovered, you'll be able to buy on the dip instead of being forced to sell. But when everybody else's the leverage players are selling at the actually wrong time, you know, down near the loads. Matt Maylie, Chief Market Strategies over at Miller

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