This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
All right, let's talk about the markets. What are the champions, what are the nots? What are not maybe in this week's trade. I feel like there's a lot coming up next week, Matt. We've got the FMC meeting, We've got several Central banks meeting, and then of course you've got some big.
Tech earnings next week.
So I feel like there's going to be a lot that can shape the trade absolutely.
And we still have you know, it's not all about earnings. We still have economic data that's going to keep pouring out from the pmis that are going to be key next week to more housing data. So there's a lot to follow along with.
All right, so let's get to it. And you mentioned strategists who are continuing to kick up their s and P forecasts. Bloomberg News Economics editor Molly Smith is with us on the phone in New York City. Bloomberg Intelligence Chief Equity strategies. Gina Martin Adams with us on Zoom in New Jersey. Gina, I do kind of want to start with you though, in terms of the earnings flow, how that's playing out, and what you're seeing in terms of the equity trade reaction.
Yeah, it's been a really interesting earning season so far. Only about a fifth of companies have reported in the index. Most of those are financials. We're about a third of the way through the financials reporting season. The net results of every of the reports so far as that earnings
are largely tracking a bit better than expected. Instead of down about nine percent, they're down about eight and a half year over year, and that is including all the companies that have reported, as well as those companies that have yet to report.
So we're down but not as bad as but not as down as much as everyone says.
Yeah, it's very early, and the price reactions, Dana frankly, is really bizarre. When you look at the average price reaction, it's much worse than the average across the board to a beat, to a miss, to whatever it is, which would suggest it's just too early to draw a ton of conclusions. And the companies that missed on both the Bottoman top line were actually up more than the market, so it's there's just a lot of confusion so far. I think it's just too early to draw a ton of conclusions.
So when are we going to know? What are the sort of bell Weather reports that you're looking forward to?
Yeah, well, next week you get forty percent of the market cup of the index reporting, so by the end of next week we'll go from twenty percent having reported to sixty percent, so we'll get a ton of context next week. Obviously, the highest expectations are in the market are for the largest stocks in the market, as well as tech, and we get a lot of those next week, including Microsoft and Google, which I think will be two of the most interesting companies to watch. Sorry, Alphabet, I'm
showing my teams there. Nonetheless, nonetheless, I think those will be two of the most interesting companies to report your Microsoft in particular, strading out a really big premium, has a potential dollar tailwind that not a lot of people are talking about, but also has a lot of AI risk and lot of optimist and optimistic sort of sentiment imbedded in that price, So we'll see how they can contend with those expectations.
Yeah, we've got a guest coming up before the close that is keeping his eye on the dollar and thinks that is certainly important, especially when it comes to kind of earnings in those companies at US, companies that sell overseas. Molly Smith come on in FOMC meeting July twenty six. Pretty much a done deal in terms of a quarter point hike.
That's the expectation, Carol. Yeah, I can't really imagine anything that would happened between now and then that would derail that. Of course, famous last words there, but really it would be the shock of the century if something through that
off date. So we does get a little bit more interesting data wise after Wednesday, when the Fed meets, we'll get a first look at second quarter GDP, and then on Friday, one of the Fed's favorite wage measures comes out, that Employment Cost Index also for the second quarter, and we'll get a look at Said's favorite inflation measures, a PCE index. So a lot of exciting things Wednesday through Friday coming up next week.
But they're still on track. I mean, the dot plot shows they need to raise two more times and more and more. In the markets, we're hearing investors and strategies say they only expect one more hike. We don't get a new dot plot until the end of the year, right.
We'll get another one in September. They come out every quarter. So I mean, yeah, that especially after we saw that CPI report. Was that last week already? I think, yeah, last week when the time f live here, you know, it was when we saw the headline inflation number coming in around three percent, and you know, some slowing in the core measure too. I think that really started to ramp up the calls for just July to be one
and done as far as the raid hikes go. So still TBD or right, Matt, that the dot plood does call for two more of this year, but we'll see how. I think Powell's pressed conference will be very informative as to how the committee sees the policy pathform here.
All right, guys, So I'm looking at a tenure right now with it's at three point eight. Among our most read on the Bloomberg has to do with Bill Gross right, formerly a PIMCO, and he is saying that the on bull market isn't in the cards, and he says ten yure rates to top three point five percent for a long, long time, Gine. I want to go back to you, how how do you project where you think treasuries ultimately land right, which you and I talk a lot about.
And then in terms of what that means for acid valuations.
I don't the first starts. I rely on Irid Jersey and his forecast for where treasuries are headed. He actually thinks that rates are going to fall over the course of the next year, in line with what the consensus thinks. But maybe we we are past, frankly, the lows of
the lows. It's really difficult to imagine we go back to the twenty twenty levels, twenty twenty twenty one levels on treasure I do think that has complications, or has consequences, at the very least for equities, because it does suggest that sort of your core valuation expectations have to be somewhat restrained. In an environment where rates are higher, you would anticipate the valuations that you're willing to pay for equities across the border generally lower, and we are seeing that,
but not across the board. I mean, what you're seeing in the S and P. Five hundred is a really big divergence between the haves and the have nots. In terms of valuations. The equal weight to index still trading well below pre pandemic averages, would maybe you would argue,
would reflect higher for longer interest rates. Whereas the top five stocks, tops seven stocks in the index and the tech sector at large is trading at back at record premiums to the rest of the index, and certainly, you know, nowhere near looks to be reflecting higher for longer interest rates. We've got to see then. The consequences of that are you've got to see much much stronger earnings growth to justify those current valuations, as tech stocks can grow into
those expectations via an earnings recovery. But it does create a little bit of volatility or expected volatility around earning seasons, and certainly at the very least some nervousness around whether or not these ducks can satisfy those high expectations.
Molly, what's your take on the treasury debate? You know, Ira Jersey and Morgan Stanley are looking for lower yields. I know Matthew Hornback said two to three percent in a recent report. But Bill Dudley, who worked at Goldman Sachs for twenty years finishing as the chief Economists before going on to run the New York Fed, wrote in a Bloomberg opinion column last month that he thinks it's going to four and a half percent.
Yeah, there's definitely a lot of different calls out there, higher for lower, longer, lower for longer. I mean, at least just from the Fed's perspective, it looks like we're going to see that Fed funds rate stay at that terminal rate probably through the rest of this year. We just took a survey of economists as to where they see the Fed, among other economic indicators landing over the next couple of years, and looks like the economists are now expecting fewer rate cuts next year from the Fed
than they did last month. So it's it's still very much a tossup as to where that longer run rate is going to be.
So, Mollie, what are you listening for from j Powell next week?
What's going to be key? In your view?
I think it's definitely going to be the as much forward guidance as he really can give, which is tough when you know the officials have stressed so much how data dependent they are, but a lot of people are I'm sure going to be looking for. Is that second rate hike really a done deal or not? And where are the where's the committee's thoughts at present of if it's going to be necessary?
And GM A, I guess you're going to be focused on earnings. I mean, I don't expect how Kl's not going to change his tune one bit, right, so he's gonna be a broken record. Is earnings your focus?
Yeah?
I mean earning earnings are going to overwhelm everything in the equity market. I suspect just given the great you know, the large swath of companies and how the size of the companies that are reporting. I would say, with respect to the FED, the market now the equity market, in my opinion, is now more focused on liquidity conditions and what's going on with the lending facility, what's going on with the balance sheet? You know, where is M two going to head over the course of the next year
or so sort of. The rate discussion is increasingly taking a backseat to those conversations right now. So anything with respect to what are they doing with the balance sheet and what does that really mean for liquidity I think could trigger an equity market reaction.
Carol kicked off the show talking about the Dow Jones Industrial Average and Pana Martin Adams is talking about M two money supply. What year is it?
I don't know. I don't know. Remember when we used to tract money flows.
To Oh my god, everything old is new again, all right, Gma, And of course Ms Molly Smith Gena Martin Adams Bloomberg part of our Bloomberg team here Gene of course with Bloomberg Intelligence, and Molly is Bloomberg News Economics editor, Gene of course, chief equity strategist.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.
Well.
US bank stocks have been on a tear this week at their.
Delusion better than feared earnings reports really bringing investors back to these shares that have really been beaten to.
Better than feared. You know, I saw that expression and I love it. It's true, right, better than feared? Yeah, I just think it was a nice turn of phrase.
Better than feared. It happens we're talking about Zion's key Corp.
The KBW Bank Index I think up about seven percent this week. So let's get into it with more in the group on the public banks from really the growing role of lenders, which I truly feel this is the story.
I think you do two.
Of the next five to ten years and we'll see how it plays out with us and really back with Matt who talked with her yesterday on TV as Anna Ursov.
She's co head of Global.
Banking of her Moodies on Zoom in New York City. Ana, thank you for coming back with us.
I will say sometimes I have a guest who's so good and insightful that I'm like, we need to get her on again, and this is the case with Anna. So in less than twenty thank you for coming back.
Yeah, thank you for having me. It's my pleasure.
Well, well, let me let me throw to you Matt first, because what was it that stood out for you that you were like, we got to continue this conversation.
Well, I mean, I thought she just had great insight across the board. But one of the things that really got to me was, you know, Carol and I talk about private credits so much and we're starting to hear more and more about it from bankers who say, this is a business, this is kind of getting away from us.
Yeah, you know the Jamie right, Jamie Diamond, you got a little sit about that private.
Absolutely, so tell us about the breakdown on it right now. I mean, it's a juicy business that the big six Wall Street banks are getting less and less of.
Yeah, I mean, I think it's it's very topical now, I think for the markets, particularly post March when the bank distress started, and of course folks turned towards the alternative ast managers who have been active in this market, you know.
Quite since probably even before the financial crisis, but I was accelerated post twenty fifteen. And there's a reason for that. I mean, we'll have to remember something called leverage a loan guidelines that was implemented by the US regulators and really tightening that arbitraged by the FED implementationenty fifteen that captured even the foreign banks that were very big in this market, like Broature Bank and Credit Sueeze, et cetera.
And if you look at when that puotal moment for private credit was, it was exactly a year or so after implementation of those leverage Manians guidelines. Why is that
the case? Because simply the large banks couldn't put this you know, six seven times very hairy deals in their balanceshept and what happened that talent folks who actually ran the businesses and Goldman it just credit sweet end up going to the private equity shops and said we can do this business here and maybe it's a better way to do this business outside of the banks.
So better way or have we just transferred the risk?
Well, this is the key question. We wrote a number of research in questioning the systematic cresk here, and I want to be very balanced about this issue. Look, there is a you know, the concerning is why these loans which are kind of what would argue one of the weakest quality loans that would be out there in the system, you know, highly levered companies with lots of hair kind of it's kind of companies that are very levered, but
a lot of in this technology sector as well. You know, why they shouldn't be on banks balance sheet and why the benefits of being on banks balance sheets versus not. Well, let me kind of break that from banks balanceship at least we will know, we will not transparently what are
they underwriting. This will be part of the bank reporting, We're part of the consolidy data for the banking system, and we'll have a little better sense how those are fairing, and it will be valued under the shared National survey, so we will know actually how those banks are performing, and transparency is pretty much uniform. On the other hand, we don't have that with a private credit lander, so we you know their secret sauces that we will basically
take these loans. We have a permanent capital to underwrite it. And we can see a lot of the founders of these businesses over the last couple of months, particularly post the bank crisis, they've been talking about we have permanent capital. We do not depend on overnight deposit and overnight funding. So this is a better form to hold a high risk asset.
Yeah, it makes a lot more sense than the duration mismatch problems that we saw up end a couple of banks. Speaking of that, on a I've heard more and more analysts say the banking crisis is behindh us. It's truly well and done. Do you agree?
And I think as we said is yesterday I repeated again for your audience. What happened in March was very idiosyncratic, exposing vulnerabilities which I think stem from some lack of consistent regulation in the banking system of banks who simply had a serious mismatch between us has and liabilities. And when you think about what happened with the speed of quantity tightening, some were just cut short. Is the banking system outside of that, you know, a couple of outfliers.
You know solid, Yes, we have a solid and strong banking system. However, doesn't mean that we are outside of the woods. First and foremost. I think this is the best probably quarter we'll see in the wild for the originals, you know. And why is that the case? Well, what we noticed across the board higher deposit cost Yes, there was the posit stability which everybody feared, but that came
at a much higher cost. And we calculated today is for the banks that were quoted so far, roughly thirty basis points higher deposit costs is quarter for that stability.
So when you look at the banking sector, the big banks, you feel pretty confident about their situation. And then with regionals you feel like, what would be the adjective to describe them.
Look what I think it's going to be an interesting year two ahead. We have a system that's very unusual on a global comparisonal level. You know, four thousand plus banks.
But is it too many? Is it too many?
Look, one can argue where it's all about the ability to provide a customer depreciation. Community banks do something that's very special for the communities, and likely one can argue maybe community bank should not be as regulated as little complex banks. But what happened was that with the regulation and with the tailoring of twenty nineteen really went beyond a definition of what a community bank hits community bank is roughly, you know, bank less than ten to fifteen
billion dollars. The regulation affected banks Swore and fifty billion. Silicon Valley Bank is not a community bank and did not and basically did not have the same capital standards or else. He has standards as some of the larger banks, and one can argue had its own complexity. So it is the system right for consolidation. I think that will
become more obvious as we see pressures on profitability. Now we're seeing it from higher to posit funding, but we will see it now from credit costs coming in due time, so I think consolidation is eminent.
What do you think about the valuations that we're looking at for these banks? I mean in terms of price to book, you know, one point one at Goldman Sachs, one point six at JP Morgan, Morgan Stanley's looking at one point seven. Do these make sense? Because Mike Mayo was on the other day and he was so enthusiastic about the fact that he thought the big banks, you know, as a block, were undervalued more than he's ever seen them.
Yeah, I mean, I'm coming from a fixedinger perspective, but nevertheless, we look at relations of banks from a more of a definition of the value of the franchise, which is very important to the creators of these banks. And you have to admit that GP Morgan is just if there was one positive, absolutely clean quarter, that was GP Morgan the bank. It's a machine on every in every franchise, and one can argue, what is that you know, what valuation is appropriate on a relative scale. A Morgan Stanley
similarly has a great franchise. I mean, they cut costs significantly, they could create some opening leverage. Although the capital markets, investment banking earnings were low, and they it's again on a very good strategic focus for more than a decade when they decided to buy the former jewel of City Group, so Goldman does not have that. Unfortunately, Goldman went into a little bit of experimental focus into consumer that they're
retracing back. But Goldman has an amazing asset management business and focus on alternatives, and they reported that that fundraising and focused alternatives actually paying pretty You've got good premium so far. And they're trying to restructure their co investment portfolio, so they will be a little bit painful until they get to their targets the next year in terms of
the ministment business and tweaking that balance usage. But Coleman has a phenomenal franchise of course all popital markets investment banking. So again I would leave that to equity analyst in terms of relations. But all of those banks are doing very well.
Well.
Super cool to talk with you.
I wish we had more time.
Yeah, come back soon. That was right, rockstar like. It was just really interesting in terms of what we covered. Anna, thank you so much of a great weekend. Anna ourself. She's co head of Global Banking over at Moody's on zoom in New York City.
Man, you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
I've been looking at bitcoin.
They they mister bitcoin, those people over at bitcoin. It did reach a fresh high for the year earlier this month, but we've seen maybe it kind of settle into a range because we have a great story in the bloom But that talks about the momentum maybe not sustainable because you've got prices stuck.
I'll tell you what. What fearless here are so desperate to call the demise of bitcoin? I mean, maybe they're just for thirty thousand dollars. I bought one for six.
Hundred, okay, but that's how many years ago.
Ten years ago? What else has gone from six hundred to thirty ten years?
Okay? Fine, how come you're still working then if.
It went that high because I only bought one, Okay.
Anyway, we want to talk into we want to talk.
A little bit about the world of crypto because we've had some court rulings that some have said is positive. We've definitely seen some of the traditional finance guys continue to kind of up their bets it looks like, and moving into the space. So let's get into it with Rob Frosca. He's co founder and managing partner at the investment firm Cosmo Ventures. They invest in digital assets and blockchain companies. He's on Zoom in Boston.
Hey, welcome back.
How are you here? It does the afternoon?
Is Matt right? What other investment has done?
So Rob, I feel like we're just I think the crypto community has set expectations wait way too high, because I always hear journalists pooh poohing crypto since it hasn't completely taken over the global financial system yet in ten years.
Yeah.
Well, you know, some people could say we're in the trough of despair right now, right you know that you know that bubble cycle where you know, the bubble pops and then everything kind of comes down and then all of a sudden everything goes goes to the moon again. I think we're in that kind of trough of despair. Right now. But there's some lot of really interesting stuff going on.
Well, you had Blackrock filing an application for an ETA among others. I'm like, who.
Hasn't filed an application seven now?
And you had Larry Fink, you know, hater of crypto, champion of ESG go on Fox Business News and say we need to tokenize more assets. I mean, if that doesn't tell you something, I don't know what does.
Yeah, look i'll tell you. So I've been in this market now since twenty fourteen, We've been investing in blockchain, and I'll tell you what I think is going on right now in the US is kind of I call it the Great trad Fire, the great traditional finance takeover. Right, So when you when you when you see the sec right they're coming down on different different projects, coming on on lack of regulation. And by the way, the rest
of the world has regulation. But when you see that happen in the big pullback, and then all of a sudden, you know, Ripple wins their case, Library wins their case, and then black Roc comes out with an ETF. Look, Blackroc doesn't do anything unless they unless they kind of know where it's going to go, right, So, so there's some interesting things kind of packed up in this. One of the things that's important to understand about about Blackrock and this ETF is number one, Coinbase is doing the
custody for it, okay, number two. More importantly, Nasdek is doing the surveillance on it. And that is the key, right, because the SEC is worried about market manipulation when it comes to crypto, and so rightfully, so right, and rightfully so right exactly and and and so so. Now now I don't know if you guys heard the CEO of Nasdek, right, and then you know they have this custody product for crypto. And I always kind of shook my head and said,
why why are they doing that? Right? Because Nasdek has two businesses. They have exchange business and they have a software business that's really about surveillance, risk management, you know, uh, fraud detection, all of that kind of thing. So why would they be building a custodian And so recently in the in their in their earnings announcement, they she said, look, we're going to put a hold on that, on that custody business, and everybody went crazy, Oh my god, what
does that mean. I'll tell you what it means. What the US wants is they want the exchanges and the custodians to be separate, and and and so and and if you look fidelity, right, they and and and Charles Schwab and Citadel. What do they do? They just launched an ed X, a new crypto exchange. The most important
word in that sentence is non custodial exchanges. So I think, you know, when you look at how this is playing out, you've got the big guys coming in with ETF products, You've got proper surveillance being put in place with with Nasdaq, and then you've got bigger players coming into the to the exchange business and a non custodi way. So so I really think, you know, what's that saying right with Warren Buffett? Right, be fearful when others are greedy, be greedy when others are fearful.
Man, what is it?
Yeah, you're right, Buppet, Yeah right.
Yeah, yeah, you know. I just think I just think, look, there's a lot of fear. But when you got these big traditional finance players coming in and they are telegraphing the market, they're telegraphing the market to say, look the way that these exchanges need to work are non custodial, and then nasdek is coming in doing surveillance.
Right.
So anyways that I'm excited about this because you know, as an investor, I sit back. I mean, what's Kathy Wouold, what's her prediction on let me look it up here?
One point million?
Yeah, about one and a half one point four.
By twenty thirty. You know, don't forget right, don't forget this. There's there's there's only a limited supply of bitcoin and you know.
Yeah, well, and by the way, that comes in our David Weston caught up with Adana Friedman, who's the CEO NAZAC president and CEO, and they talked specifically about that. So anybody who wants to hear a little bit more about it directly from her can check it out on the Bloomberg or at Bloomberg dot com. Having said that, Robert, you play in the blockchain space right largely or predominantly or only?
Why?
Well, look, so I'm a dot com entrepreneur. I actually started the very first financial service on the internet, first stock quilt server. I'm talking nineteen ninety three, quick and bought it. I want to become a quick and financial network. I did it. I did one of the world's first AI companies out of Carnegie Mellon with our CTO. We
sold it to Licos, took that public. So I've been in this market for a while and when blockchain emerged, what I immediately realized is that this is this is this is the piece of the Internet that's been missing. And what that is is basically that that peer to peer networked, decentralized kind of trust layer. Uh. That that that everybody needs, uh, the ability to clear transactions peer to peer in a trustful way and in a resilient way. It's kind of a geeky way, right, it's my Carnegie
mamil and kind of batching the geek cree way. So for me, I think blockchain is probably, you know, I'm gonna put a little hyperbole here, probably I think it's there's going to be more value created there than the Internet itself, like it because it's the value layer of the Internet. So anyway, I'm all in on blockchain all in.
So what are you actually doing in in the space. You have VC investments, Yeah, so we.
Have we actually so we have a venture fund that invests in uh in the space and being pioneers that we are, we decided to tokenize it and we were the second VC fund to do that. I think we're the only evergreen VC fund to do that. We use Securitize, who now is doing KKR and a bunch of others.
Uh.
So we really became and we did that to really become experts in the space. It's you know, we were so early. We didn't think, you know, liquidity was going to fall out of a sky, right. Uh, it's in my in my opinion, it's still early. Uh, but we wanted to know the market, so we tokenized it. And what that fund does is invest in all kinds of early stage ill liquid generally blockchain assets, from the networks to web three to UH to the infrastructure, to the
tokenization platforms across the board. And then we have a hedge fund that we're now launching, which is actually a risk managed fund, uh, and it's all proof of steak digital assets. So there's actually the ability to generate a yield while to the market with alpha.
All right, gotta leave it on that note.
What Matt, I'm just thinking, like I wonder if Gary Gensler is gonna come knocking on your door anytime soon.
Where are you.
We'll leave that for another time.
Everything we do, everything we do is you know, is regulated, right, so we're not the project worthy.
Investments, all right, Rob, Have a good weekend. Rob Rosca, He's maaging partner of Cosmo Ventures from Boston.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.
New issue, by the way up, the magazine is out on the cover store about WeightWatchers company Noon Now has w W.
It's going to always be like that.
Yeah, it's so silly. It's it's Weight Watchers.
All right, Well it's WW.
But anyway, the story's about its last shot, perhaps in terms of strategy, by embracing the wonder diet drugs of we goo vi and ozembic, those drugs we've been all talking about it the world has been making headlines because of their use among celebrities and influencers because they make you lose a lot of weight. They're expensive, but we really wanted to get a medical view on them. So
great to have back with us. Is doctor Ian los Pader, Clinical Professor of Medicine at NYU Lango Medical Center on Zoom in New York City.
How are you? How are you? How's your summer going?
Great? Thanks Carol, Matt great to see you. Yeah, summer's going great. Scuba diving, it's been fun.
Would you go scuba diving Bermuda.
Which is quite beautiful? Actually great, great coral reefs in the middle of the Atlantic. Who would have guessed.
You're not talking you.
That's fantastic.
You're talking to two divers. I've never gone diving at Bermuda.
Really beautiful.
Yeah, yeah, forty feet. There's a shelf, a bit of a continental shelf there, great coral, a few Rex from the eighteen hundreds.
Very cool.
That's fantastic.
All right. We're going to switch gears though, because we do want to talk to you.
I especially have questions because I want to use this stuff, so I Doc, I gotta say, have real trouble keeping off the pounds. I need to lose twenty at least twenty pounds. And the issue is I get home at night after a long day at work and after dinner, I grabbed the hogendaws and I just can't stop myself from doing it. Now I realize it's my weak will that's the issue. But I hope that if I could get a hold of just a little bit of a zempic, that could solve the problem.
Well, you, you and a lot of people. It's become very popular, but you know, why do we care about weight and obesity? It's really more than just appearance. I mean, obviously, over the ages, appearance as standards have changed. In the seventeen and eighteen hundreds, being more overweight was attractive. Now we realize, you know, it's more attractive to be thinner, but it's also there are really serious health risks associated
with obesity. The concern, of course, is forty percent of Americans are obese, two thirds are overweight, and we really define that as a BMI or body mass index, which is a calculation based on height and weight. So people whose weight is too big for their height have an elevated BMI and really over twenty five BMI is overweight
and over thirty is obese, But who cares that? The reason is we see a much higher incidence of type two diabetes, beatty liver sleep, batanya, heart disease, sudden death, cancers, increased risks of breast cancer, colon cancer, liver cancer. So it's not just appearance. We really want to get weight to a more ideal level to reduce the risks, and in fact, we really do reduce morbidity and mortality when we get the weight down. It's also a cost issue.
Over two hundred and sixty billion dollars a year is spent on obesity related issues, that includes medical costs, lost work, disability. The question is how do you do it? How do you get the weight down? And really in the old days, it was like, well, just eat less calories and burn and work calories. But we now know it's more complicated. They're genetic.
Is it really more complicated than that? For most people die? Because when I do want to lose weight, all I do is eat healthy and exercise, and guess what the pounds follow.
Matt keeps saying in He keeps being like, you just got to be strong and not eat, and he's like, it's just your.
You know, you can control this health, which is true.
For many patients. But many patients based on their genetics, based on food density. People eat burgers, and so forth. You know the fast food which is a higher calorie, Well, you can't do that. You can't do that.
You got to eat fruits and vegetables and exercise.
Right, Yes, that is absolutely true. But for those people who can't do that, whether it's discipline or other issues, they are a whole host of medications. In the old days we would do like some fat blockers and diabetes meds. But as researchers began to look at various meds for diabetes type two diabetes, they found these GLP one agonists which work on receptors in the brain and the gut
and do laglatite, some aglatide laglatide. All of these things are for example, like wagovi or ozempic is one generation. We have some newer ones cultures epetite made by Lily or Manjaro. They all of these medications work both at the brain to suppress appetite, which is very effective. Also in the gut. It slows motility, the stomach empties slower.
You feel more full, but you can also get some complications from that nausea, heartburn, sometimes vomiting, constipation, but occasionally even more serious things like pancreatitis or gallbladder issues, very very rare thyroid issues, so you really need to be reamed or you appropriate. And it's also cost insurance. These are very expensive because they're all on patent, no generics, so insurance does not want to pay for it. For a casual weight loss, you really need to be certain
criteria for example, like diabetes. Some insurance companies will pay for obesity, but most private insurance really insists that you have type two diabetes. And there are some patients who are obese but their sugars are Okay.
Hey, can I ask you something?
And this is going to go into the woke world, you know, because I do feel like over the years there's been pressure to embrace especially for kids. You know, when kids or just individuals are overweight. But he's so fat, they'll stop, stop, stop to be more welcoming. But I there are health implications of being overweight.
I can't tell you how.
Many times, like a doctor's like, I'm so glad.
You know, he just went through the list of things that happen.
I know, so, but how how do you balance that?
Right?
Because we're supposed to be more accepting of variations in individuals, but from a medical perspective, it's not healthy.
Yeah, no, you can't be accepting. I mean, of course people had various issues and orientations, but when it comes to weight, diabetes, fatty liver, liver disease, it's not okay to say, well, that's just you know, how you want to be. We have to we know medically this is unhealthy. It increases the risk of complications in early death. And for patients who want to work with the doctor, we do have various approaches. Now, how long you have to
stay on it? Are the risks of the medications we want over those and also the patients who do lose weight, and we do see a lot of patients lose thirty forty fifty pounds ten percent of their body mass, which is great. How long did they have to stay on it? Can they taper off? They're really a lot of questions, not to mention the cost of the medications. I wish it was so easy as diet and exercise. Just be disciplined.
That works for some people, but often not. And the ability to come in and say, you know what, on medication, I'm just not hungry, I feel full and I've lost weight is a very nice got it right?
I thank you, doctor Ian las Bader of NYU Land going.
I'm rolling Marc.
Journal.
How about you let me drive? No no, no, no's.
Honey please, I'll do the riding gravels.
Let's I want to drive.
It's the question time.
This is the drive to the Globe dot com. Think we'll round to shut it on on Blueberg Radio.
All right, everybody, we've got just under eighteen minutes left in today's training session, getting ready to wrap up the weekend, the day on this Friday, and kind of bouncing around here. We've got like gan as you just heard from Charlie up on the S and P and the Dabba, call it really changed, call it flat if you look at
the trade here. Let's get to it though, and bring in Ryan Dietrich, his chief markets Drudge, is over at the Carsoon Group and he joins us on the phone from Charlotte, North Carolina.
Hey, Ryan, nice to have you back with us technically. What's jumping out at you when you look at the markets?
Yeah, good, good afternoon. Thanks leving me back. When you think about it, there's a lot of positive things happening. Caroly. I think this week that got me though with banks, right banks. They had the earnings last week and some this week. Banks have really been strong, they've been breaking out. I mean, we all know what we've heard the first
half of the year. Technology communication has done amazing and it's true, right, But one of our themes at our media outlook that we just released the Carson Group last week is is broadening out and to see banks and financials in general really starting to do well along with an energy to the better industrials doing better is that theme, and the see banks leading. It's just hard to think there's this big scary recession coming that we keep hearing about.
We haven't thought that. We've been in the no recession camp all year. It's quite lonely, get a little more crowded now. But do see banks doing well as what impresses me technically here.
So the banks we've been talking about this day, all day today and also the last couple of days. The valuations are extremely low. If I look at Bank America, price to book is one even Goldman Sachs, I know they had a bit of a disappointing quarter, but price to book is one point one. Why are these things you think valued so poorly?
Did we lose him. All right, we lost him.
Okay, Well did he hang up on us?
I think he was mad because he's actually on the phone in Cincinnati, and.
I think I missed up.
Oh I thought it was Charlotte.
No, no, no, no, it's okay. No, he's not mad. He's a super nice guy. We're going to try and reconnect with him. But good question.
Right, You've been looking at this right in terms of bank valuations to try and understand a little bit.
Yeah, I'm just trying to wrap my head round why they're doing so badly, especially in a market that's you know, s and P forty five hundred doesn't necessarily signal a recession coming anytime soon to me. I guess you could say that the bank stocks are being valued by the same people.
It should be close to one, right though, that's what you want.
More than one. More than one just means they're valued at the stuff they have, all right, you know, don't they have any future at all?
So ask his question.
He's a technician fundamentally. But let's see what he's back.
Is he back?
Yes?
Oh?
How do you know this stuff? And I don't because I am a boys Ryan. Hey, sorry, we lost you there. Just wondering about the bank valuations. I mean, to me, they're so sorry about that. To me, they're not telling the same story as you know, the overall stock market s and P forty five hundred, we're up what eighteen percent year to date, looks fantastic, and yet the bank stocks Goldman Sachs valued at one point one time his book Bank America is valued at its book.
Yeah, I mean, you think about it, that's a potential positive. Now the banks have had the problems. We know about the inverge yield curve and some of the concerns that are out there, so that could be playing into some of it. And the truth again is earnings are the spectacular. No, but we know it's all relative, right, it's just kind
of where relative expectations. I know, American Express is not a bank, but you look at what American Express just said, you know, record spending, don't see the consumers slowing down. Those things all make sense. And we all know the seven big stocks. We've heard a lot about that. If you look at the four ninety three, take out those seven, you know, four or twelve month earnings are like right in the line it would have been in the past,
you know, the twenty years. So again, yes, Tech's had his big run, but other parts of the world are relatively cheap. And I'll say one final comment on this. We like small caps and mid caps. We like them a lot because we don't see a recession. Those areas are historically cheap if you go back multiple decades relative to large caps. So again it is broadening out. Happens financial, small caps, industrial energy, they all are pretty dark, good dusts.
How would you play them, Ryan, would you buy an ets? You know, would you buy individual stocks? How do you play small caps in mid mid caps?
Yeah, we would stick with just ETFs or mutual funds. I I can't do too much of the individual equities anyway, but when it comes to ETFs, I think that's that's kind of nicest way to play. To play a lot of those things, especially midcaps. Midcaps are what everybody talks about. Small caps and large caps. Midcaps just kind of get left right. But again, you look at what's going with the earnings and some of the fundamentals. There are some really solid MidCap names in there, and that's a group.
We're overweight small caps and midcaps. We're all year We're still in that camp for a second half, continued to catch up trade.
Hey.
Ryan, one thing we talk about is we're seeing increasingly economists stop talking about recession and rotcheting hire their second quarter and third quarter GDP estimates. At the same time you see US equity strategists upping their forecast for the S and P five hundred. They were really wrong at the beginning of you know, if you go back to what they were saying at the beginning of the year. John Authors of Bloomberg News has an interesting story about all of that.
Having She'll got five more months for them.
Yeah, right, all right, But still we've gone halfway through the year.
Fundamentally, you know, we've also talked a lot about a rolling recession perhaps.
Than kind of a full on recession.
Do you see any kind of fundamental or technicals playing out in the market that says that if you look at housing versus maybe cyccles versus discretionary.
I mean, I'm just curious if you're seeing any of that.
Yeah, we're not seeing any major signs of weakness right now, anything about that. Like you just mentioned, it was an equal weight discretionary relative to equal weight staples, plain and simple extreme strength there, which is what you tend to see when it's risk on scenarios. And now, I'll be honest, coming into this year, we thought the SMP could gained about fifteen percent for the year. We're one of the more polish people out there also saying no recession, and
I get it. We're right where we are. We're above actually the stocks markets above and we did upgrade our view on equities like a lot of other people. Now we're one of the more bullish people. And you could say we still say we're wrong. You know, we've been over at equities all year, but we're we're seeing just so much good things that are taking place. And you mentioned cinema. Let's talk about cinema just for a second. Here the AAII poll, it came in over fifty percent bowls,
the highest level since April of twenty twenty one. I took a look, when you have the first time there's fifty percent balls or more, which is a lot. That's a lot with a year without having it for a long time. People didn't believe. Then they believe what happens next when you look back thirty years, right the next six months or higher, like every single time up close to double digit returns on average. So just because they're starting to see some bulls finally come back, you need
bulls for a bull market to take place. We're finally seeing some bulls come in, and that we don't think that means is this run is about to end. In fact, we thinks there's still a good deal left to it. But it is interesting to see so many people jumping on the bullish bandwagon here in the last couple of weeks.
I don't know Julian Emmanuel ever at Emma cry As, I calls it the strategist short squeeze, So basically they were on the wrong.
Side and everybody's kind of ratcheting up their estimates. Ryan, thank you so much.
Ryand Turkey's chief market strategist are at the Carson Group joining us on the phone in Cincinnati.
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